FastUpFront

Do you ever get really excited, because you come across a program which adresses a pet issue – a pet issue which is rarely adressed?  Well that’s how I feel right now.  I came across a great program yesterday which addresses a pet issue of mine, and could help your business, and your city in the future.

What am I talking about?

The South Side Entrepreneurial Connect Project (SSECP) launched in June 2004 in Syracuse, NY.  The Whitman School of Management at Syracuse University wanted their students to turn around the Syracuse’s “inner city”: the South Side.  How? By fostering the development of an entrepreneurial community.  The SSECP has created a supportive infrastructure for small businesses and they lend the encouragement, assistance and resources needed to increase the number of startups and to ensure the long-term sustainability of those startups and existing businesses.

Who’s running the SSECP?

Graduate students work together with SU faculty to work with small businesses and to start new initiatives.  They walk prospectve business owners through the business plan process and help them get financing.  They even have a center which provides reduced rent and infrastructure such as internet, phones, etc.  The students give classes at the center.

How can this impact you if you don’t live in Syracuse?

The model for the SSECP actually started much further away than Syracuse.

Michael H. Morris, who holds the Witting Chair in Entrepreneurship at Syracuse, helped develop the idea for a program to create economic growth while teaching in South Africa. Morris and his colleagues started the program to encourage entrepreneurship in South Africa’s black townships, which Morris described as the most poverty-stricken areas of the country.

“A lot of what we developed there has some transferability to the inner cities of America,” Morris said. “The issue is simply, ‘how do you create economic opportunity for people?’ And the old, out-of-date thinking is you do that by getting big companies, like General Electric or Wal-Mart to locate facilities in the inner city or wherever. And the reality is that’s not how you do it. It doesn’t work; it’s not sustainable. You do it by doing it organically. By empowering people to create their own ventures and supporting them.” – The Daily Orange

What Morris is doing is he has created a grassroots model which he designed for a 3rd world country, and he is having students apply it here.  He hopes that his initiative will be used as a model at other Universities across the US.  I hope so too!  Everyone wins – the students, the businesses, and the communities.  Let’s hope this program gets picked up by the University in your area.

One thing that I consider fun (we all have to have hobbies) is taking something that appears on the surface to be a niche and only specific to a small group of people, and extracting essential principles which are Truths.  I then apply those Truths to completely different situations.  This is, in itself, is a type of innovation.

I found a great resource today, which taught me some essential Truths of Innovation which I believe are applicable by all businesses big or small, regardless of region – albeit, especially for manufacturers, especially in Georgia.  The Georgia Manufacturing Survey (GMS) is conducted by Dr. Jan Youtie and Prof. Philip Shapira from Georgia Tech to assess the technological and innovation capabilities of Georgia’s manufacturers.  It is the only survey focused on innovation which is consistently conducted in the US.  Here are the Univerisal Truths I learned from their last surveys:

Why You Should Implement Innovation Strategies

Just in the overview, I found two convincing arguments: 

• According to the study, profit rates have been dropping for manufacturers which get their edge with low prices as opposed to through innovation.
•  Outsourcing impacting your business? GMS found that innovation-base companies were much less likely to be impacted by outsourcing.

 How to Encourage More Innovation

According to this survey, innovation is correlated with:

• Significant organizational changes
• Widespread use of technologies in the workforce
• Highly skilled and educated employees

How to Fund Your Innovation Make-Over 

My Note:  If you are looking for an innovation injection for you business – to escape from the lowest-price fight, you might need a cash injection first.  If you want to update technology, change your structure, or implement other major changes, it might cost more money than you have on hand.  Depending on your needs, you can look at traditional or alternative financing options.  Check out this post on financing options.

In any event, it’s 2008, and I hope that means that Dr. Jan Youtie and Professor Philip Shapira are getting ready to publish the results of the 2007 Georgia Manufacturing Survey (The website said that a new one would be undertaken in 2007).  I’m excited to see what new insights they will have into innovation and technology.

Okay, I admit it.  If you can’t tell already from my more recent posts, I am a bit of a cynic when it comes to the ease and even the possibility of most small businesses qualifying for a traditional bank loan.  However, I came across a more optimistic writer, and decided to share this CNN Money article with you.

The article does a case study for a woman named Gloria who runs a bakery from her home, and who wants a loan to buy the inventory of a bakery in town.  She does not have three years of financial history to report.  These are the most important points the article made about how to qualify for a loan without that essential financial history:

1) Construct a REALISTIC monthly revenue projection for the first 3-5 years.  You have an edge if you have SOME sales history which you can present in support of your projections.

2) Business Plan:  Use your revenue projections to create financial projections for the first three to five years.  These are the projections you should include:

a) A profit and loss projection – Remember, “…your gross margins (revenue less cost of goods sold) must, at minimum, be enough to maintain positive profits and cash flows…  Providing clear documentation of expected operational expenses is important, particularly for variable expenses. ”

b) A cash flow projection which shows cash-in/cash-out on a monthly basis

c) Projected year-end balance sheets

Tools:

1)  The article directs small business owners in need of a loan to SCORE’s free business plan templates, and also their templates for financial projections.

2)  They also suggest using iBank.com to “broadcast a loan application and other data to hundreds of banks” at a time.”

3) I recommend checking out some previous posts of mine on free online tools for small business owners.

Unfortunately all this optimism remains unsubstantiated.  At the bottom of the article, they ask people to submit stories of how they qualified for a loan without a financial history – there don’t seem to be any responses. 

If you are one of the many small business owners who are unable to qualify for a loan, or you simply don’t have the time to waste trying, you might need to consider alternative financing options. 

 In the following transcript from the podcast of The Great Big Small Business Show, we see that business cash advance through credit card factoring is gaining in popularity and reputability.   

A simple “swipe” of a customer’s credit card keeps your working capital advance up to date. Since the rate at which they collect the money is determined by a realistic evaluation of your company’s prior monthly credit card receipts, the collection process is both predictable and easy. Their unique credit scoring system provides a “customer-friendly” approach to qualification. When most lending institutions seek to “screen-out” potential applicants, we work hard to “screen-in” qualified business applicants. The response time is fast and approval can be done in just a few days.

This may be something worth checking out for your business if bank and traditional financing is unavailable to your business.

 They also alluded to (and recommended) people-to-people funding services like Prosper: 

The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper’s online auction platform.

People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select.

Borrowers create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. Then the auction begins as people who lend bid down the interest rate. Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan.

I always enjoy when other professionals in the world of financing recognize the benefits of what we do.

 Article Name: Show Me The Money: Funding Your Small Business

 In an article I read from MShale (The African Community Newspaper), Ongeri does a case study on a minority-owned small business in seek of financing.  He lays down two options: debt or equity. Equity is partnership, debt is a loan.

It is a good article, and has some good info on minority loans as well as regular ones.  However, it is slightly lacking in that there is no info on alternative financing. If you are interested in learning about other options, expecially for businesses with bad credit/no credit, check out my posts on alternative financing.

“O.K., folks, let’s move along. I’m sure you’ve all seen someone qualify for a loan before.” (Policeman talking to a crowd peering through a bank window.)

I think many of us can appreciate this cartoon, especially now that getting a loan is so difficult.

If your business doesn’t qualify for a bank loan, or you don’t have the time to go through the long process, you may want to consider alternative financing solutions that can take the place of traditional small business loans.  Often, these solutions are ideal for small businesses such as restaraunts, salons, auto shops, etc. which receive fluctuating monthly revenues, but need to maintain their working capital.

I wanted to summarize a recent article directed at small businesses looking to get a bank loan secured by the SBA.

Here’s a summary:

Pros:

• “…the interest rate is right around 6 percent and it’s locked in at a fixed rate, in some cases for 20 years.”
• “Some small business owners have found the SBA a worthwhile partner when it comes time to leverage a major business loan. “

Cons:

• “Borrowers, however, should be prepared to jump through some hoops securing any type of loan in this economic climate. Banks will want a number of assurances that the small business is a sound investment for them, and they will indeed see a return on their loan.”
•  “A prospective borrower shouldn’t walk into a financial institution hoping to obtain a loan coupled with an SBA loan without good credit, a viable business plan, a working knowledge of the industry or business that he or she intends to start or buy and a 10-to-15-percent down payment.”
• “Navigating the SBA Web site to gain more knowledge of the process can be a daunting prospect, not to mention the myriad of paperwork involved in the application process.”

According to the article, the process can be so overwhelming, that some small business owners have to invest time and money going to independent brokers!

If you don’t have what it takes to get the SBA to secure part of your loan, you may be unable to get a loan at all, in the current credit crunch.  If this is the case, or if you just are looking for a faster simpler solution, you can look into business cash advance, a type of credit card factoring to get up to $250,000 approved in less than 24 hours, bad credit is okay.

However, if you do have the time and good credit, though, SBA backed loans are the way to go.

A new brokerage for invoice factors launched January 1, 2008 which could possibly provide a boost within the invoice factoring industry: FactorLane.  The website is supposed to be similar in concept to The Lending Tree, which is a mortgage broker site.  Factors bid for company invoices, and companies rate the various factors.

Although this is a great idea, and will surely be very useful, I have some doubts.  I tend to think that with a few exceptions, it will help the factors themselves more than the companies seeking financing.  On the one hand you do have competition in the picture, which will almost certainly help to get the best deal; on the other hand, the potential clients still need to get all the same information together.  According to Factor Lane’s website:

“Customers that use FactorLane have the option of uploading the documentation you need into our secure intranet where you can complete the bidding process and begin the underwriting. That means no more waiting for customers to call, and no more waiting for documents to be mailed or faxed. Instead, you gain immediate access to the information you need to make your bid, and even close the deal!  
  
FactorLane’s online system also helps you target the right customer using various criteria, such as: factor amount, credit score, years in operation, location, industry, value of assets, etc. Because our process is easier and less time consuming, you can devote more time to securing new clients.”

Basically, it sounds great for the factors, but like a lot of work for a company in need of quick cash.  To top it off, if you: have bad credit, have just been around for a few months, live in the wrong state, etc – You probably won’t get the money you need.  And all the work you spent getting together paperwork and scanning it to the site is in vain.

As someone in the Credit Card Factoring field, I strongly recommend looking into this alternative financing method – before you invest your time, just to be rejected again.

We can get you $250,000 approved in 24 hours – credit score doesn’t matter.  Check out business cash advance.

A topic which I have become increasingly curious about recently regards Islamic Banking Laws.  Now, all I know is that risk is shared and there is no interest allowed.

In credit card factoring, or business cash advance, we pay business owners money in advance, which they expect to be getting in credit card receipts over the upcoming months. 

For example, in a restaurant finacing case, let’s say our customer is a restaurant owner.  He wants to buy new kitchen equipment for his restaurant.  He comes to us, and we give him $30,000.  In the coming months, when customers pay at his restaraunt using credit cards, the money comes to us, instead of to our client.  We do end up getting back more money than we originally paid out, but it is not interest – we simply advanced him the money at a discount.  The benefits to our client is that even if he has bad credit or no credit, we can still work with him and we can get him the cash he needs quickly.

 Is this Sharia compliant? (Is it compliant with Islamic banking laws?)  I am very curious: why, or why not?

 Thanks to everyone who helps with this.

Reported in The Gazette – Cedar Rapids, IA

“The Targeted Small Business program provides low-interest financing for small businesses that are at least 41 percent owned by a minority, woman or person with a disability. “

This article tells of 3 different restaurants which benefited from state loans with a 4 or 5% interest rate, ranging from $20,000 to $45,000.  I wonder what the credit requirements are…

For those of you who aren’t in Iowa, or don’t qualify for this sweet deal, remember that you still have options.  Even if you don’t qualify for a bank loan, you can still get financing you need for your business through alternative methods like business cash advance.  Also, known as credit card factoring, business cash advance can provide funds quickly to all types of small business owners – to women, minorities, the handicapped, and to everyone else as well.