Show me the money

Published 10:05 am Wednesday, September 2, 2015

It has been said the three things entrepreneurs need the most when they are starting a business are: space, money and employees. Our region is blessed to have the Franklin Business Incubator, a resource that provides not only great office space at a great price, but also many amenities to help young entrepreneurs navigate the start-up process that can often be very overwhelming. We can also help with the second need: money. In partnership with the SunTrust Foundation, Franklin Southampton Economic Development, the Franklin-Southampton Area Chamber of Commerce and Paul D. Camp Community College, microloans are available for small business owners. These loans are available to anyone who owns or operates a business within the corporate limits of the City of Franklin or Southampton County, maintains a bank account (approval of credit score required) and is at least 18 years of age. This loan program offers up to $2,000 per loan, with flexible repayment schedules, and it allows small businesses to establish, stabilize, or expand. For more information on the microloan program, please call 562-1958.

But, what if the small business owner needs more money than our local microloan can provide? There are resources in place for that, too. Of course, there are the traditional lending institutions — banks, credit unions, and finance companies — but, sometimes even they are not able to assume the amount of risk that may come with lending to small business owners. So, where can small business owners turn to? If you are in this situation, please rest assured that there are resources available to help you as well!

Have you ever heard of the Virginia Small Business Financing Authority (VSBFA)? If so, you are likely already aware of the wonderful services they offer to small business owners. If not, it is our pleasure to let you know that they exist and to tell you about what they have to offer. The VSBFA is the Commonwealth of Virginia’s economic development and business financing arm. They help banks make loans to businesses that can demonstrate repayment ability, but in cases where the bank needs additional collateral support or a more robust secondary repayment source by providing either cash collateral, subordinate companion loans, guaranties, and/or loan loss reserves. Throughout their nearly 30-year history, the VSBFA has put several products in place that have helped many banks throughout Virginia increase their commercial loan portfolios while reducing their credit risks in helping small business owners.

The VSBFA’s Loan Guaranty Program is designed to help Virginia’s small businesses to obtain the funds needed to start, enhance, or expand their operations and thereby create new jobs for citizens of the Commonwealth. The VSBFA guaranty reduces the bank’s credit risk and helps businesses to qualify for financing that would otherwise not be possible.

Then, there is the VSBFA’s Cash Collateral Program which is very similar to the Loan Guaranty Program, but is most typically used where the applicant’s company has the demonstrated ability to cash flow the debt, but the collateral coverage is insufficient for the financial institution’s normal underwriting standards.

The VSBFA also has a product called the Economic Development Loan Fund which is designed to fill the financing gap between private debt financing and private equity. Funds are provided to create economic benefit through increased revenues and the creation of new jobs, as well as retention of “at risk” jobs in Virginia.

The VSBFA also has a Small Business Microloan Program. With this product, businesses are able to access short-term loans that must either create or save permanent full-time jobs for residents of Virginia. As with the other products, certain criteria must be met in order to qualify, and the VSBFA works in conjunction with other lending institutions to make loans possible for small business owners.

Another popular program is the Child Care Financing Program. This program is designed to help both child care centers and family home providers that are fully licensed and in good standing with the Commonwealth of Virginia. In these cases, loan funds cannot be used to purchase or improve the land, building construction, permanent mortgages, working capital, or to refinance existing debt. Proceeds, however, can be used to reimburse borrowers for costs, supported by paid receipts, incurred after the date of written loan approval from the VSBFA.

If any of these programs pique your interest and you would like to learn more about them, you have a few options: you can call or email the VSBFA office for more information, you can drive to the VSBFA office located on 14th Street in downtown Richmond, or you can attend a Lunch ‘n Learn at the Franklin Business Incubator on Wednesday, Sept. 23, from noon-1:30 p.m. Mary Jo Sisson-Vaughan, Regional Lending manager with VSBFA, will be on hand — along with several area bank and credit union managers — to review the programs with you and to answer any questions you might have. All you need to do is register by calling 562-1958 or emailing, pack yourself a lunch, and come on down. Beverages and dessert will be provided for participants.

NANCY PARRISH is the Small Business Development manager at the Franklin Southampton Economic Development Inc. Call 562-1958 to contact her.