Shocking but true statistics: 20 percent of all small businesses survive the first year, 30 percent survive the second year, and half survive the first five years1. The U.S. Small Business Administration (SBA) provides programs and services to assist small businesses that are just getting started and help keep guide them in the right direction.
MOVID Studios, in Parkersburg, West Virginia is one company that successfully completed their first year of business and credits the SBA for helping them getting over the first-year hump.
Jon Defibaugh, a former commercial producer for the local television station with 11 years of experience, decided to open his own multimedia company in June 2011. Defibaugh struggled the first six months, as many new businesses do, but was able to sign several contracts to keep him busy through 2012. However, there was a problem; he had one camera, one computer and a car that was falling apart. Defibaugh was one misfortune away from being out of business. That’s when he met with his local bank to secure the funding needed to purchase backup resources.
To his surprise, he heard from multiple banks that the business was “just too young” and regardless of how nice of a guy he was and how good of a plan he had, they wouldn’t even consider giving him a loan until his company was 12 to 24 months old and was profitable beyond being able to cover the bills. Defibaugh was faced with not being able to obtain a traditional loan and also unable to secure a line of credit due to not having enough equity or income to justify the amount he needed. His luck began to change when one loan specialist recommended he speak to Tim James from First Microloan of West Virginia, a SBA designated lender. With counseling from the West Virginia University Parkersburg Small Business Development Center (SBDC), partially funded through SBA, Defibuagh was able to perfect his business plan and secure a loan through the microloan program.
“I am never a proponent of debt, but managed debt is better than zero cash flow because you can’t survive. If you borrow $20,000 over four years, and pay $500 a month – that is manageable for me,” states Defibaugh. “I don’t think I would have been able to find another way to keep my business open, I would’ve had to scale down that first year and either end up failing or growth would have been so slow that I still wouldn’t have been eligible for a traditional loan or line of credit because I wouldn’t be able to show the numbers.”
Because of the assistance Defibaugh received from SBA, he was able to purchase additional equipment, expand office space, and take on regional clientele. MOVID Studios is reclaiming the technology and video industry in Parkersburg and allowing local companies to get high quality services that had recently been outsourced to other states.
For more information on programs and services offered by the SBA, visit www.sba.gov.