— By Jenn Surface
If you are like many other small business owners, gaining access to capital is a top priority for ensuring that your business can grow and succeed.
Whether you need short- or long-term working capital, equipment, real estate property, or you want to buy a business – a range of lending resources is available to support your needs and vision.
Small business owners should begin by getting familiar with the following two types of institutions: FDCs (Financial Development Corporations) and CDCs (Certified Development Companies) are both non-profit institutions that focus solely on helping connect small businesses with lenders and capital. These institutions serve as advocates for small companies with limited resources to make getting a loan easier.
FDCs are critically important because California small businesses work through them to apply for loans under the California Small Business Loan Guarantee Program. Under this program, lenders provide loans directly to small businesses – and those loans are backed by state guarantees which minimize the lenders’ risk of capital. The FDC issues state guarantees up to 80% of the lender’s loan, resulting in opening up access to capital for small business that may otherwise experience barriers because lenders do not want to take on the risk.
Like FDCs, CDCs are also nonprofit corporations – but these are certified and regulated by the Small Business Associations (SBA). CDCs work with banks to provide financing to small businesses through programs like the CDC Economic Development Loan Program. CDCs are important because the financing they offer often includes SBA-backed loan guarantees and preferential rates, again, designed to help eliminate obstacles to financing that small business owners often face, and get them the funding they need now. Such programs include the SBA 504 program (for the purchase of fixed assets like equipment or real estate) and the SBA 7(a) loan that can be used to finance regular working capital needs in addition to the purchase of fixed assets.
Both CDCs and FDCs work hard to help the small business community succeed one way or the other, depending on the kind of financing that is need on a case-by-case basis. For more information, please take the time to visit the CA Governor’s Office of Business and Economic Development page on FDCs, and the SBA’s page on Loan Programs.
Jenn Surface is Founder and Principal of Vantage Intelligence. She is a former US Government Intelligence Analyst (FBI) who represents a new breed of private investigator specializing in intelligence services for the legal field in today’s digital world. Services include uncovering hidden assets, locating hard-to-find persons, and developing deep background profiles. Visit her website to learn about these services and more.