Michigan Makes Venture Matching Funds Available

The Michigan Strategic Fund (MSF), through the Pure Michigan Venture Match Fund (PMVM Fund), is soliciting applications from for-profit Michigan-based companies that have received an equity investment commitment from a qualified venture fund for commercialization and growth purposes to provide a match of the investment as follows:

  • Qualified venture led investments from $700,000 to $1,000,000 will be matched by a 50% ($350,000 to $500,000) investment from the PMVM Fund.
  • Qualified venture led investments from $1,000,000.01 to $3,000,000 will be matched by a $500,000 investment from the PMVM Fund.

Applications are being accepted now at: http://www.michiganadvantage.org/Pure-Michigan-Venture-Match-Fund/

To see a list of incentives/resources for companies that are located (or want to locate) in Oakland County, Michigan visit: www.globaloakland.com

Statement from SBA Administrator Mills on new Federal ‘QuickPay’ program

WASHINGTON – SBA Administrator Mills statement on the President’s “QuickPay” announcement today to cut in half – from 30 days to 15 days – the amount of time it takes federal agencies to pay small businesses for the products and services they deliver to the federal government: 

“The thousands of small businesses that provide great products and services to the federal government have a big reason to cheer the President’s ‘QuickPay’ announcement today.  When small contractors get their money in 15 days instead of 30, it results in a permanent infusion of cash flow into their businesses.  They can put that money towards working capital, expanding their businesses, marketing their products, and creating jobs.  Their financial footing gets stronger – permanently.  With nearly $100 billion each year in federal contracts going to small businesses, cutting in half the time they get paid is a powerful way to help put America back to work now.  QuickPay is a smart and powerful boost that effectively delivers billions more dollars into the hands of small contractors so that they can do what they do best – create jobs.”

5 Keys to Achieving Fiscal Fitness For Small Business CEOs Planned For Fall

MICHIGAN- The Michigan Small Business & Technology Development Center (MI-SBTDC) will present financial tools workshops in metro Detroit in during the fall.  “5 Keys to Achieving Fiscal Fitness,” a workshop to help the non-financial manager business owner achieve Fiscal Fitness is a state-wide training program designed to strengthen financial literacy and improve the ability to access capital businesses need to grow. The program is sponsored by Fifth Third Bank and events will be held in Waterford, Livonia and Detroit.

Topics to be discussed include:

  • Identifying problems using your balance sheet and income statement
  • Providing ways to increase your company’s cash flow
  •  Using breakeven analysis to improve decision-making
  • Planning the working capital to support your growth
  • How to keep your banker on your side

“5 Keys to Achieving Fiscal Fitness” will cost $25 per participant (Fifth Third clients can attend at no cost.) Classes will be held: 

  • September 28         Oakland County Business Center in Waterford
  • October 4                Schoolcraft College in Livonia
  • November 3            TechTown in Detroit

Networking and continental breakfast start at 8 a.m. and the seminar is from 8:30 a.m. until 12 p.m.  Register online or call (734) 487-0355 for more information.

 “In these trying financial times, Fifth Third bank recognized how important it is to reach out to business owners and help them become savvier in managing their business finances. Fifth Third Bank is proud to support the MI-SBTDC is these efforts.”  Dolores Sturdivant – Fifth Third Bank.

The Michigan Small Business & Technology Development Center (MI-SBTDC) is a statewide business assistance program that provides one-on-one counseling, training and research support for Michigan small businesses. The Southeast Michigan Region serves Wayne, Oakland and Monroe counties is headquartered at the Eastern Michigan University College of Business in the Center for Entrepreneurship with full service locations at TechTown in Detroit, Schoolcraft College in Livonia, the Monroe Industrial Development Corporation and Oakland County Business Center.

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. Fifth Third operates five main businesses: Commercial Banking, Branch Banking, Consumer Lending, Investment Advisors and Fifth Third Processing Solutions.  http://www.misbtdc.net/events.aspx

SBA Launches Temporary Program for Commercial Real Estate Refinancing

Agency will begin accepting refinancing applications Feb. 28 for small businesses facing maturing mortgages, balloon payments

WASHINGTON, D.C. – Small businesses facing maturity of commercial mortgages or balloon payments before Dec. 31, 2012, may be able to refinance their mortgage debt with a 504 loan from the U.S. Small Business Administration under a new, temporary program announced today. 

The new refinancing loan is structured like SBA’s traditional 504, with borrowers committing at least 10 percent equity and working with third-party lending institutions and SBA-approved Certified Development Companies in the standard 50 percent/40 percent split. A key feature of the new program is that it does not require an expansion of the business in order to qualify. 

SBA will begin accepting refinancing applications on Feb. 28. The program, authorized under the Small Business Jobs Act, will be in effect through Sept. 27, 2012.

“The economic downturn of recent years and the declining value of real estate have had a significant, negative impact on many small businesses with mortgages maturing within the next few years,” said SBA Administrator Karen Mills. “As a result, even small businesses that are performing well and making their payments on time could face foreclosure because of the difficulties they face in refinancing and restructuring their mortgage debt. This temporary program is another tool SBA can provide to help these small businesses remain viable and protect jobs.”

The SBA initially will open the program to businesses with immediate need due to impending balloon payments before Dec. 31, 2012.  SBA will revisit the program later and may open it to businesses with balloon payments due after that date or those that can demonstrate strong need in other ways. 

“We are making this initial restriction to make sure our funding goes first to small businesses with the most need,” said Steve Smits, SBA Associate Administrator of Capital Access.

Borrowers will be able to refinance up to 90 percent of the current appraised property value or 100 percent of the outstanding mortgage, whichever is lower, plus eligible refinancing costs.  Loan proceeds may not be used for other business expenses. Existing 504 projects and government-guaranteed loans are not eligible to be refinanced.

Congress authorized SBA to approve up to $15 billion in loans under this program ($7.5 billion in both fiscal 2011 and 2012).  Together with the first mortgage, this temporary program will provide up to $33.8 billion of total project financing.  Additional fees charged to the borrower will cover the cost of this refinancing program and as a result no subsidy will be needed.  The program is expected to benefit as many as 20,000 businesses.

SBA’s traditional 504 loan program is a long-term financing tool, designed to encourage economic development within a community. A 504 loan provides small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.

Typically, a 504 project includes three elements: a loan (or first mortgage) secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a second mortgage secured with a junior lien from an SBA Certified Development Company (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business borrower.

The Most Expensive Mistakes Made by Small Business Owners

 By Kevin Hagen, Associated Content, Huffington Post

By avoiding some common costly mistakes, you can significantly improve your chances of making your business a success.

Small business owners may start out with high expectations, but according to the U.S. Small Business Administration, roughly 50 percent of them will fail within the first five years. Reasons for failure can be as varied as the risks involved in starting and managing any business. But there are some common mistakes that small business owners make that if avoided, can lead to the ultimate success and sustainability of their businesses.

Lack of planning. A great idea can be the inspiration for a small business, but the proper planning is what will get that venture off to a good start and keep it on track. As Steve Strauss, author of the “Small Business Bible,” points out, being aware of potential business problems before they arise is one way to avoid them. Every small business needs a realistic and comprehensive business plan, based on accurate and objective information. The plan should include a clear description of the business, the owner’s goals and the keys to success. It should also include an analysis of the competition, a marketing plan to position the business’ products and services, and a budget and cash flow projections.

Borrowing too much. Initial high expectations can work against small business owners when they lead to borrowing too much. It may take some time to start generating profits; large monthly debt payments in the early stages can sap critical cash flow that would be better invested in marketing and developing the business.

Spending too much. While a small business owner needs to have the necessary facilities and resources, spending too much on equipment and furniture, hiring too many employees and renting too much space can place too heavy a load on a start-up business. As pointed out by Nolo, it’s better to start on a shoestring. Then the business can be built up as it starts to generate profits and a positive cash flow.

Insufficient capital. While borrowing too much can sink a small business, insufficient capital can also derail even the best-laid plans. As indicated by Business Know-How, many small business owners underestimate how much money they will need and are forced to close before they have even had a chance to succeed. Small businesses can often take up to a year or more to really get going. It’s vital to have enough working capital to survive that period.

Inadequate pricing. Jay Goltz, writing for CNN Money, describes a home furnishings boutique that had great products and growing revenues, yet it was losing money. Goltz explains that entrepreneurs tend to concentrate on what they love. But every small business owner must also be the CFO. In the case of the home furnishings boutique, not paying sufficient attention to finances resulted in overlooking the need to raise prices.

Not seeking advice. In the Puget Sound Business Journal, Dennis and Margaret Purvine tell of a small business owner who landed a big contract, but because of an unusual pricing model and some onerous terms, the business ended up losing money on the deal. If the small business owner had consulted with an attorney to review the contract, this mistake could have been avoided. A small business owner may be an expert in a chosen field, but a small business needs help from legal, accounting, tax and other experts.
____________________________________________________________
Let the consultants at Strategic Growth Concepts help you avoid these mistakes and others so your company can continue to achieve growth.  Click HERE to be contacted for a FREE initial consultation.

Importance of Budgeting and Financial Management for Small Business

In this time of economic hardship, small businesses and micro-businesses are among those being hardest hit – particularly with their inability to access lines of credit to help maintain effective cash-flow.  Therefore, it is imperative that these business owners take the steps necessary to budget and effectively manage the funds they do have available.

However, it is a common occurrence that small businesses, particularly micro-businesses having 10 employees or less, tend to shy away from developing an operating budget.  Frequently the businesses are so small or so new that the owners are convinced they have no way of projecting their revenue and therefore have nothing to budget.  This is a serious mistake! 

Budget graphicIn spite of a ‘supposed’ inability to project revenue, the business is still incurring expenses, therefore it needs to develop a basis from which it can discern business trends and identify opportunities which will enable you to make decisions about how you are running the company.  A budget is one of the most important tools to help you do this.

To help you understand the value of developing a budget – and managing that budget – for your small business we offer the article below which recently appeared on Entrepreneur.com.

___________________________________________________________

Even startups need to forecast and plan–especially now.

By Asheesh Advani   |   Entrepreneur Magazine – July 2009

Most entrepreneurs detest budgeting. Working on something as old-fashioned as an annual budget confines the imagination and limits flexibility. Still, budgets are more important than ever in today’s market environment.

I’ve heard all the excuses for avoiding budgeting. “Startup cash flow is too unpredictable.” “One big customer order could change the course of the business, so what’s the point in setting a budget?” “I can’t predict the capital market, so how can I forecast how much cash I’ll raise and be able to spend this year?”

In my experience, these excuses mask the fact that right-brain creative entrepreneurs just don’t like left-brain financial planning. So, if you’re running your startup solo, you should force yourself to develop a budget to hold yourself accountable. Here are three reasons why:

  1. It will help you to become a better manager. When done properly, budgets can be extraordinarily useful in testing and refining your ability to forecast and manage. While boards like to use budgets to hold managers accountable, the startup CEO can use budgeting to test whether the drivers of his business hold true. One straightforward way to do this is to set an annual budget with a set of key assumptions (e.g., number of new clients; product price), then reforecast the year every quarter by updating those assumptions with the latest results.
  2. It will help you raise money. When I raised money from angel investors or institutional investors, I learned firsthand the importance of budgeting. Investment terms often specify that management must provide the investors or the board with an annual budget. Developing a company culture that tracks results to budget will help you meet and exceed the expectations of your investors.
  3.  It will help you avoid running out of money. The No. 1 risk to any startup is running out of money. If you’re like most entrepreneurs, you’ll fluctuate between a conservative reality and an aggressive dream state, which keeps you motivated and helps you inspire others. When you build your budget, start with expenses, not revenue; they’re much easier to forecast. This will keep you grounded and reduce your risk of running out of money.

Asheesh Advani is president of Virgin Money USA, author of Investors in Your Backyard and founder of CircleLending, which pioneered the business of managing person-to-person loans and mortgages and was acquired by the Virgin Group.

Changes to SBA 504 Loan Program Will Allow Businesses To Refinance Existing Debt, Expand, Create New Jobs

WASHINGTON – Small businesses seeking to expand will be able to refinance existing loans used to purchase real estate and other fixed assets as a result of permanent changes to the U.S. Small Business Administration’s 504 Certified Development Company loan program. The changes were authorized in the American Recovery and Reinvestment Act of 2009.

 

The permanent changes will allow small businesses to restructure eligible debt to help improve their cash flow which, in turn, will enhance their viability and support growth and job creation. The 504 loan program can be used to purchase business real estate or fixed assets, such as heavy equipment or machinery, and expand current development projects.  Read the complete news release from the SBA HERE.