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If you're familiar with the free money claims, you're not alone. Stories like this have been around for decades. The truth is that the government does not grant money is to start a business or expand for entrepreneurs.
"federal and state agencies provide a business to start no grants available to repay debt or to cover operating costs. Government agencies do not provide" special "grants for women, minorities, veterans and disabled entrepreneurs . the federal government can not offer grants for small businesses under the Recovery Act. "- US small Business Administration
What does not make the government available, is even more valuable. The Small Business Administration (SBA) and the Department of Commerce to work as an intermediary in the minority-owned small businesses the resources they need to compete in the market to join. Government authorities perform three main services with a view to help small businesses. You:
- guarantee bonds facilitate loans with other banks and help entrepreneurs find venture capital;
- Ask entrepreneurs with access to public occasions with the government and with other companies; Make and
- minority small business grants to nonprofit organizations and educational institutions that work directly with small businesses or that serve as intermediaries for other non-profit and institutions.
looking for small business financing? Check out our Complete Guide to Small Business Financing Options at all to see small businesses.
What is a small minority-owned business?
the SBA defines a "minority" as a US citizen, who belongs to one or more of the following ethnic groups: African Americans, Asians, Native Americans and Hispanic. It is not necessary to your business as a minority-owned, to identify your company to fare well in the private sector, but federal and state governments put a small percentage of the opportunities and government contracts for small companies aside, the majority in owned and controlled by one or more members of the aforementioned minority groups.
The federal government sets a small business (or concern in small businesses) as independently owned and operated, for-profit companies that can be known, but does not dominate his industry. Small businesses have a tangible net worth that does not exceed $ 18 million. For a company to qualify as a small company, it must meet the small business size standards in terms of annual revenue and number of employees. The SBA offers industry size standards for determining whether a company qualifies as a small company:
- Preparation: can Maximum number of employees from 500 to 1500 are manufactured depending on the type of product;
- Wholesaling: Maximum number of employees from 100 to 500, depending on the particular product can be provided in the region;
- Services: Annual receipts may not exceed $ 2.5 to $ 21.5 million, depending on the particular service provided exceed;
- Retail: annual income is $ 5 is provided depending on the particular product to $ 21 million, may not exceed;
- General and Civil Engineering Construction annual revenue to $ 17 million may not exceed $ 13.5, depending on the type of construction;
- Special Trade Construction: Annual receipts do not exceed $ 7,000,000; and
- agriculture :. Annual income can not exceed $ 0.5 to $ 9,000,000 not exceed, depending on the agricultural products
- minority-owned small businesses at least 51% owned by a member of a minority have become group. Even public companies must have 51% of one or more minority owned stock. Also, the company day-to-day management is carried out by a member of a minority.
Lack of capital is definitely a reason why small businesses fail. But it is not the only reason. In fact it is not even the main reason. Inadequate leadership is identified generally failed as a top reason a business. Other culprits are:
- lack of product demand, low turnover
- Bad or no marketing plan
- Poor Money Management
- declining market
- unexpected growth
- Fierce competition
- inability to differentiate themselves in the market
- not to understand the needs of your customer
Judging by this list of reasons, fail small businesses, you can, that access to capital see, is not the only quality of a successful company. Remember how small businesses to examine the selection of minority grants and other valuable resources.
first as a minority-owned companies certified
obtain 
There are two primary methods for company Minority Business Certification. The first is. By the 8 (a) program of the SBA, which provides support for small businesses available through "socially and economically disadvantaged" persons in possession of Business Development Federal law defines socially disadvantaged people as those who have suffered, "racial or ethnic prejudice or cultural bias in American society." Economically disadvantaged people are "socially disadvantaged individuals whose ability to compete in the free market economy has been impaired due to diminished capital and credit opportunities."
The second method is by the National Minority Supplier Development Council (NMSDC) , The NMSDC is a nonprofit organization by providing opportunities for small businesses to the success of the owned small businesses of minorities encouraged to sell goods and services to its member companies. NMSDC currently has a list of 3,500 corporate members, including global brands such as General Electric, Wal-Mart, Xerox, Volkswagen, FedEx, ExxonMobil and Time Warner. In 2011, the corporate members of the NMSDC earned more than $ 100 billion out of the member's minorities in goods and services.
certification process is performed NMSDC minority not easy. Entrepreneurs must apply for certification by one of the major cities in the country three dozen regional councils of NMSDC. The application asks owners to detailed information about their companies to submit.
To qualify for small business minority certification must be in the United States for non-profit organizations. They must be controlled and administered by a minority of a member of at least 51% owned. The NMSDC holds a minority an individual with at least 25% Hispanic, African American, Asian-India, Asia-Pacific, or Native American to be an heir. After the application of the review on the NMSDC interviews candidates and performs on-site inspections of small businesses confirm the information provided on the application is correct. Applicants who do not have minority certification obtained appeal the decision 30 days. If the application is rejected a second time, entrepreneurs can apply again after one year.
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Minority Small Business Grants and other resources
The 8 (a) Business Development Program
7 SBA (a) program began actually as Business Development Act in the 1950s. His goal was then what it is now - the pitch between small businesses and large enterprises to pave of smaller companies with access to human resources, technical resources, contracting opportunities and capital they have not otherwise
In a recent published report, the economic viability of minority consciousness venture Capital industry entitled: impact of William E. Jackson III and Timothy Bates Investment Strategies diversification, that it one of the most important of the many minority-owned small businesses challenges as less funding not minority-owned businesses. This problem can occur on the fact that minority-owned businesses are smaller than not contribute its minority-owned competitors are usually directly. The SBA tries this problem with the 8 (a) program for the elimination of small businesses specifically controlled the majority (at least 51%) of a person who is disadvantaged socially or economically. Once in the 9-year program accepts participants work with the SBA and its affiliates the following development:
- An SBA-approved business plan
- A profitable business model
- a unique business identity
- a marketing plan for landing contracts
Those who sometimes refer to the 8 (a) program as a client program because it helps 8 (a) participants win contracts set aside by the government for small, minority-owned company set in. In reality, the 8 (a) program is a business development program for public contracts to help the minority-owned companies competing in addition to acquire these companies helps commercial business. The SBA calls 8 (a) participants a healthy balance between their public and private sectors to keep agreements. Participants receive training, consulting, marketing support and the opportunity to participate in a mentoring program to take. Participants also get access to SBA-backed loan guarantees and bond that can help them get access to larger orders.
During the 8 (a) program is not explicitly set it for business is "minority-owned", it makes the participants specify must be socially and economically disadvantaged. There are several ethnic groups, the socially and economically disadvantaged, namely African Americans, Hispanics, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans, are suspected. Most programs also include Indian tribes, Hawaiian organizations located by Alaska Native Corporations owned companies, and some community development companies.
SBA 7 (a) program is one of the least expensive ways to small businesses to obtain financing. Find out more in our guide to current SBA interest rates.
Mentor-Protégé program
Under the 8 (a) Business Development Program, the SBA couples program, new members (protégés) with well-established, successful companies (mentors) in private Sector. Mentors assist proteges with their business development efforts through a relationship one-on-one offers the proteges feedback offers, advice and accountability they need to achieve outlined in their business plans the objectives. Participants in the 8 (a) program can choose to sign program for the Mentor-Protégé in their first four years in 8 (a) as long as they never won an 8 (a) contract.
Protégé participants get the benefit of Mentor resources, including personnel, technical assistance, and also financial support for some access. Mentors can help protégés capital by investing in companies protégé increase as long as the mentor does not acquire more than a 40% stake of the shares in the company. Mentors can also joint venture with protégés to give a better position both companies for public contracts or provide protégés with subcontracting opportunities on the mentor of government contracts.
SBA's HUBZone Program
The federal government sets aside to compete 3% of all federal prime contract dollars to HUBZone-certified companies. A HUBZone (Historically Underutilized Business Zone) is a geographical area by the federal government to have determined limited economic growth. These areas are urban and rural communities generally. Companies that maintain HUBZone certified are a principal place of business in a HUBZone and also adjust employees who live in this HUBZone.
In 2011, 3% of the government set aside land totaled $ 9.6 billion in federal contract awards to HUBZone-certified small businesses alone. can find out entrepreneurs if their business is in one of these designated areas to check through the HUBZone maps. The HUBZone Hotline SBA is every Tuesday and Thursday afternoon 14:00 to 03:00 EST available. Call (888) 858-2144 and use passcode 3,061,773th
Surety Bonds Program
The Surety Bond Guarantee Program the SBA provides project managers with the knowledge, not that in the case of a contractor to be provide a contract, a deposit insurer either the project owner for the financial loss incurred is compensated or obtain another contractor to finish the job. The SBA, through the Office of Surety Guarantees, helps small businesses guarantees obtained by bonds for contracts up to $ 5 million guaranteed
According to the SBA, there are four types of guarantees .:
-
Bid Bond: provides the bidder will provide and enter to a contract in the contract the required payment and performance guarantees, when the award is granted
-
Payment Bond :. Ensures that. Manufacturers and suppliers
Performance Bond properly paid for their services under the terms of the contract
- . Ensures that the contract under the provisions in the contract is executed
-
Ancillary Bond: Requirements Provides contract that are not performance related fulfilled
it is often the case, both in the public and private sectors, that contractors must be licensed, bonded, and to bid to complete construction projects and insured. In fact, the federal government requires contractors on federal construction projects provide guarantees to have estimated at $ 150,000 or more, including the offer, service and payment of contracts. But it is not only builders who need Bail. Car dealers are required to have Bail in 47 of the 50 states. Health Clubs Buy Bail members no charges in the case paid to reimburse the facility closes down. Cleaning services must be bonded, and insured before taking private or commercial contracts.
have performed economically disadvantaged minorities have a harder time securing usually Bail, especially if the owner also has credit problems. Bonding requirements differ from sector to sector and state to state. The SBA does not charge a fee for small businesses bid bonds, but collects 0.729% of the contract price for payment or performance bonds. Surety companies pay the SBA 26% of the fee they charged the small businesses for the bond.
You can in our guide to learn more about Surety Bonds What is a surety bond? 5 facts you need to know.
Small Business Investment Company Program
The Small Business Investment Company SBA (SBIC) uses program private investment funds from companies across the nation and guaranteed SBA loans growth capital for small businesses available put. SBICs are independent, for-profit company to manage the investment of public and private funds. While they are regulated by the SBA, licensed any investment company SBIC to use agents, has its own criteria for the choice of when, where, how and with whom to invest their funds.
One thing to keep in mind about SBICs she's investment companies have to expect good returns on their investments. SBICs are not investing in re-lenders, Re-investors, passive companies, real estate companies, fields, project financing or companies who currently can not afford to overall public good.
The SBA has a directory of SBIC program licensees who operate small businesses in 37 states. Currently there are no SBIC Licensees located in the following states. Alaska, Colorado, Hawaii, Idaho, Mississippi, Montana, New Mexico, Nevada, South Dakota, Washington, Wisconsin, Virginia and Wyoming
loan programs
While the government free money does not hand from, it does small business with other ways to provide access to capital. Most small business owners find it quite difficult to get financing for their businesses. This is especially true for minority-owned businesses that meet often too short, the requirements of a traditional lender
SBA 7 (a) loans -. SBA-backed 7 (a) loans are small loan companies to obtain financing much needed, while minimizing the risk SBA by funding companies through the third-party banks take provide the opportunity to minority-owned companies.
The SBA Money can not lend directly to businesses. The SBA is working with its partners repayment of certain small businesses to secure loans that the lender 7 (a) make the borrower. This government-sponsored loans are actually commercial loans that were structured according to specific SBA requirements. They are from the companies, not individuals, and are reserved for companies that do not qualify for traditional commercial loans.
To estimate your SBA 7 (a) loan costs, try our SBA Loan Calculator.
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SBA Microloans -. If you cover up for start-up capital or financing searching your operating costs may be to go a microcredit of way. Microloans are small, SBA-backed loans from other banks directly to small businesses. Loan amounts range anywhere from $ 500 to $ 50,000. The SBA allows borrowers to use microcredit to working capital, inventory, supplies, furniture and appliances. Borrowers can not use microcredit to buy property or to settle debts. The average loan amount is $ 13,000 borrowers have to pay up to six years microcredit, usually at a interest rate of 8 to 13%. The speed with which a small company that wipes out loans based on lender requirements, the amount of loan, and the way in which the loan was used.
While the SBA guarantees the loan, not it does not distribute microloans. Instead, manage intermediaries microcredit program and provide guidance, advice and technical support directly to the borrower. You can download a state-by-state list of program facilitator here. A microcredit organization that has a nationwide presence and has a reputation for lending to minorities Accion, you can read more about it, click here
Business Consortium Fund Loan Guaranty / Participation Program , - Business Consortium Fund, Inc. (BCF) is monitored by the Council minorities development Nationale a business development program. BCF's mission is certified minority-owned suppliers to join with private sector companies. BCF also provides certified minorities performed with access to finance through credit lines, contract financing, and various types of commercial loans.
BCF assists qualified certified minority-owned businesses to obtain loans from its network of partner lenders if they are not qualified by more conventional programs for funding. BCF facilitated its first loan in 1987. Between 1987 and 2012 BCF 70 minority businesses (MBE) operated, resulting in 7342 new jobs and for certified minority-owned small businesses in financing $ 226,500,000.
It is more difficult to obtain financing for start-ups as for established companies. For more information on the creation of loans, read our article here. To learn more about the way you learn a startup with personal money to finance, go here. And if you have more than $ 50k in a retirement account, read about ROBS and how a ROBS can unlock these funds for your start without early withdrawal taxes and penalties to pay that. Or to speak a timetable for ROBS professionals at Guidant.
covenant funded state and local programs for minority-owned small businesses
Most of the time, minority-owned small businesses in need of funding and technical assistance to support non-profit organizations like the NMSDC or by state and local government agencies are looking for. Federal funds that filter in the small business do so through these types of intermediaries
Minority Business Development Agency -. The US Department of Commerce Minority Business Development Agency (MBDA) funded 27 MBDA Business Centers (MBCS) across the nation. Minority business enterprises work directly with GBZ to take advantage of consulting services that provide access to capital MBEs insight on always to acquire several markets of exploration, export of goods and contracts in their industry. After MBDA ,, GBZ helped customers access to more than $ 800 million in financial packages that include working capital, investments and bond
SBA PRIME -. The SBA program for investment in micro-entrepreneurs fund organizations that help low-income entrepreneurs who are unable to gain access to capital by conventional means to start their small business or expand. These community organizations make loans from $ 500 to $ 50,000 directly minority-owned small businesses. These loans can be used for working capital, inventory and equipment, real estate, and renovations. , A complete list of SBA PRIME grantees, for the financial years 09, 2010 and 2011. You can download PDF reports directly from the SBA website
National Minority Business Departments - Most states in the Union have a specific State Department, with minority-owned small businesses relates busy. Small business owners whose shops are located in close proximity to the major cities of the United States can be found at the local level also opportunities and resources.
Alabama
Department of Economic and Community Affairs
Office of Minority Business Enterprise
Clarence man
Clarence.Mann@adeca.alabama.gov
PO box 560
Montgomery, AL 36103-560
(334) 353-5680
California
Department of General Services
Office of Small Business certification and resources
Jim Butler
jim.butler@dgs.ca. gov
707 3rd Street, 1st floor, room 400
West Sacramento, CA 95605
(916) 375 4445
Connecticut
department of management services
Supplier Diversity Program
Meg Yetishefsky
meg.yetishefsky@ct.gov
165 Capitol Ave ,
Hartford, CT 06106
(860) 713 5228
Delaware
Department of Management Services
Office of Supplier Diversity
Michelle N. Morin
michelle.morin@state.de.us
government Support Services
100 Enterprise Place, Suite 4
Dover, Delaware 1904
SLC: D100
(302) 857 4552
Florida
Department of management Services
Office of Supplier Diversity
Thad assets
Thad.Fortune@dms.myflorida.com
Office of Secretary
4050 Esplanade Way
Tallahassee, Florida 32399-0950
(850) 487 9863
Georgia
Georgia Department of Economic Development
Mary Ellen McClanahan
memcclanahan@georgia.org
75 Fifth Street, NW, Suite 10
Atlanta, GA 30308
(404) 962 4820
Illinois
Department of Central management Services
Business Enterprise Program
Frank McNeil
BEP.CMS@Illinois.gov
100 West Randolph
Suite 4-100
Chicago, IL 60601-3218
(312) 814 410
Indiana
Department of Administration
Minority Business Development Program
Jocelyn Williams
jowilliams@idoa.in.gov
Isabel Smith
mailto: ISmith@idoa.in.gov
402 W. Washington Street, Room W469
Indianapolis, IN 46204
(317) 232 3061
Iowa
department of inspections and Appeals
Targeted Small Business Certification Program
man Montgomery
TSB@dia.iowa.gov
Lucas State Office Building
321 East 12th Street
Des Moines, IA 50319-0083
(515) 281 5796
Kansas
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