QUESTION: I have limited resources and need financial help in starting a business venture. What programs are available to low-income, women and minorities?
ANSWER: There is no quick and easy solution to fund a start-up business when you have limited resources and a less than stellar credit rating.
Crowdfunding websites such as kickstarter.com and IndieGoGo.com are a possibility. Also microlenders like kiva.org make loans to minorities and low- to moderate-income individuals. Banks usually want to see a credit score of at least 650 with collateral to secure a loan.
My advice to clients is to first develop a written business plan and determine how much money you will need to cover start-up costs and ongoing expenses until you reach the break-even point, usually six to nine months.
Rather than trying to start from scratch with little or nothing, keep your current job and start to save something from each paycheck until you have accumulated enough to take that “leap of faith.”
In addition to savings and help from family and friends, there are community development financial institutions. These are small private-sector financial institutions like a community bank, credit union or community development fund. Virginia Community Capital, for example, is a CDFI with offices in Richmond, Christiansburg and Norfolk.
Small businesses that will most likely find assistance with financing from a CDFI include low-income, minority- and women-owned. Minority- and women-owned businesses should make sure they are certified as such.
CDFIs may be able to help you qualify for lending programs including Small Business Administration and conventional loans. They also offer services including business plan preparation, pro bono legal aid and credit repair.
Borrowers can find information on CDFIs through SCORE or the SBA’s Small Business Development Centers. A detailed explanation of the program and state by state participants can be found at https://fitsmallbusiness.com/community-development-financial-institutions-cdfi-list.
Another resource is the Virginia Small Business Financing Authority. Aligned within the state’s Department of Small Business and Supplier Diversity, the authority offers programs to provide businesses, nonprofits and economic development authorities with the financing needed for economic growth and expansion across Virginia. For more information, go to www.sbsd.virginia.gov.
Gray Poehler is a volunteer with the Richmond Chapter of SCORE, Counselors to America’s Small Business. To ask a question or request free and confidential business counseling, go to Richmond.score.org/mentors. Learn more about SCORE’s workshops on the website or by calling (804) 350-3569.