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Wednesday, February 2, 2011

For early-stage businesses, there are financing options available (published in June of 2009 in the SB News Press)

With the weakness in the economy and the complete collapse of the financial system last year, it has become increasingly difficult for all businesses, and especially start-ups and early-stage businesses, to secure financing.  But, for the enterprising business owner willing to do some legwork, there are funding options out there.

The Small Business Loan Fund (SBLF) ( was established by Women’s Economic Ventures (WEV) in 1995 with a Grant of $75,000 from the City of Santa Barbara and $225,000 in matching funds from seven local banks (Santa Barbara Bank & Trust, Montecito Bank & Trust, Northern Trust, Mid-State Bank, Community West Bank, City Commerce Bank, and California Thrift & Loan). The goal of the Loan Fund is to diversify and expand the local economy and create new jobs by providing start-up and expansion capital to small businesses that do not qualify for conventional bank financing. SBLF loans are targeted to low and moderate income men and women, minorities and others who have been traditionally underserved by lenders.  

In order to apply for a loan from the SBLF, the applicant must have received some business training or education, or have completed the Self-Employment Training program through Women’s Economic Ventures, or have demonstrated business experience and/or time in business; have a written business plan; own and control at least 51% of his or her business; have lived within Santa Barbara or Ventura County for at least one year; are a U.S. citizen or legal permanent resident; and can accept the SBLF loan terms.

Start-ups, if approved, can borrow between $1,000 and $25,000.  Applying for loans under $5,000 does not require a business plan or presentation to the SBLF Loan Committee and can be approved 3-4 weeks after submitting the application. A complete small loan packet consists of the following:
  • Small Loan Application
  • Authorization to request a credit report 
  • Personal Financial Statement 
  • Cash Flow Projection 
  • Income Taxes
  • Additional documents may be requested by the loan fund administrator.
Businesses that have been in operation for more than 1.5 years can apply for a Business Expansion Loan of between $5,000 and $50,000.  Applications for loans over $5,000 require a business plan and approval from the SBLF Loan Committee and can be approved 6-8 weeks after submitting the application. A complete “large” loan package ($5000 and above), consists of the following:
  • A completed business plan
  • An appropriate repayment plan and cash flow projection
  • Authorization to request a credit report 
  • Personal Financial Statement
  • Income Taxes
  • Referral Letters
  • Additional documents may be requested by the loan fund administrator
Loan proceeds can be used for the purchase of fixed assets, physical improvements to the place of business, and operating expenses.  Loan funds cannot be used to refinance existing debts unrelated to the business, for the purchase of real estate, payment of back taxes, or consolidation of loans.

The cost of applying for a loan with the SBLF is either a $35.00 or $50.00 application fee, depending on the size of the loan requested, and is due when the application is submitted.  A 2% Loan Fee will be payable at the loan closing. The fees may be financed into the loan.  The interest rate on most SBLF loans is fixed at a minimum of 2% above the published New York prime rate, although loans which are considered to be high risk may carry a higher interest rate.  The maximum loan term is no more than seven to ten (7-10) years, and will depend upon the size of the loan, the use of the funds, and other factors, i.e. the useful life of an asset.

Women’s Economic Ventures also offers a host of educational and information services to help business owners and entrepreneurs succeed.  They even offer a self-evaluation prospective entrepreneurs can take to see if they have what it takes to succeed in business. 

WEV's core training program is a 14-week course designed to help clients assess the feasibility of their business idea, write a business plan, learn how to conduct a feasibility study, perform a break-even analysis, develop a marketing plan and project cash flow.  These are critical elements of any application for a loan or for angel investors, as well as for applying for SBLF loans. 

Teaching methods include small group or partner work and lectures. The proprietary workbook, Vision to Venture, is supplemented by local experts who offer practical knowledge that clients can apply to their daily business experiences.  The course meets weekly for 3 hours, and there are two full-day Saturday workshops. The course is offered twice annually: February through May, and September through December. The maximum class size is 30, and classes are taught in Santa Maria, Santa Barbara, Ventura, Oxnard and Thousand Oaks.

The cost of the course is determined using a sliding scale, which is based on household income for the past year.  Students must have email address, be familiar with Internet navigation, be computer literate, and be able to use Microsoft Word and Excel.  To qualify, prospective students must attend a WEV orientation, complete application materials, and schedule an appointment to submit their application.

The WEV also has some amazing instructors and advisors with extensive backgrounds in a wide variety of business disciplines such as management, human resources, public relations, sales and marketing, facilitation, executive coaching, board development, career development, community leadership, government, the non-profit sector, communications, and public relations, just to name a few. 

The WEV also offers an online business subscription called “WEV Got Business”, which offers an online business listing, their e-newsletter, business consulting services, loan consulting, and entrepreneurial coaching. 

Like many organizations dedicated to helping people and communities, the WEV depends on the support of their local community (you and me) to continue to provide these valuable services.  If you are interested in supporting the WEV, you can visit their website (address listed above) to donate.

One thing I have found, both in my professional life, and in my research and study of the economy, financial markets, and business in general, is that, no matter how bad things are, there are always opportunities for those willing to put-in the effort.  Along the same lines, there are always sources of funding, like the SBLF and people ready to help, like the WEV, for those enterprising business owners ready to turn their dreams into business reality.

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