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Make Your Small Business Easily Found Online

By bridgetwpollack, Guest Blogger
Published: April 24, 2014

If you’re looking to ramp up your business’s online presence and help your potential customers find you more easily, you may have considered a variety of web advertising options: banner ads, social media ads, pay-per-click sponsor ads, SEO, SEM, etc. What’s the most effective route to take? What’s the least costly?

The new infographic, Online Advertising: Go for the Right Audience and You'll See Real Results, compiled research on the effectiveness of various types of online advertising options for small business owners. It found that one-third of small and mid-sized businesses buy online advertising, spending an average of $6,800 annually. Some interesting findings to note in your own online advertising pursuits:

·         A typical person sees 1,700 banner ads per month, but clicks just 0.1% of the time.

·         3% of small business owners think that pay-per-click ads are effective

·         77% of ads are never seen

·         Investment in social media ads has increased from $3.8 billion in 2011 to $5.9 billion in 2013. This amount is projected to increase to $9.8 billion in 2016.

Check out the infographic for the full story on how small businesses like yours are taking advantage of online advertising and to see how Facebook, Twitter and LinkedIn compare in terms of click-thru rates and ROI.

Pay for Traffic or Get it Free?

Given those survey results, you might be wondering if paid ads are worth the financial investment. SCORE mentor and owner of A&E Advertising and Web Design, Edison Guzman, answers exactly that question in the (appropriately titled) online workshop, “Pay for Traffic or Get it Free? (The Difference Between SEM and SEO).” Edison says the key to choosing the right strategy is: “before starting any campaign, you need to know the result.” What type of online presence are you looking to promote? Who and where is your target audience? How much are you willing to spend? Who will implement this strategy? These questions will help you determine the right approach for achieving your goals.

Listen in to this online workshop to find out:

·         The tools needed to get the most out of your time and investment in online advertising

·         The difference between on-page SEO and off-page SEO and how to maximize both

·         The 7 parts of your website that tell search engines how to rank you

·         How social media plays a role in your search engine ranking

·         And… the only guaranteed way to rank on Page 1 of search engine results in less than 1 day

Make Content Work for You

You’ve certainly heard that content marketing is the next big thing for positioning yourself as the go-to resource in your industry. But it’s also an absolutely critical (and often free) way to get your business better known to the search engines. In his 4 part series, How to Win the New Game of Semantic Search, Bill Merrow, co-founder of Synergy Sales and Marketing, covers everything you need to know to get search engines to authenticate your website and, ultimately, bring you more and better visitors. Bill says “In September 2013, Google’s Hummingbird update rocked the world of every business concerned with search marketing, as simple keyword strategies were detonated and Google stopped reporting keywords in Google Analytics.” Therefore, he explains, content marketing is a necessary tactic for effective SEO.  In the series, Bill details the 4 components to properly implementing an effective content strategy: volume, velocity, variety and veracity.

The more you know about effective online advertising, the more you realize what a powerful tool it can be for bringing potential customers in the virtual door. It doesn’t have to be costly but it can require a time investment to learn the tools at your disposal and decide what works best for reaching your target audience. If you’re not sure who that is or how to reach them, reach out to a SCORE mentor for free, expert help.

About the Author:

bridgetwpollack
Bridget Weston Pollack

Guest Blogger

Bridget Weston Pollack is the Vice President of Marketing and Communications at the SCORE Association. She is responsible for all branding, marketing, PR, and communication efforts. She focuses on implementing marketing plans and strategies to facilitate the growth of SCORE’s mentoring and trainings services. She collaborates with SCORE volunteers and develops SCORE’s online marketing strategy.

Quick Tips for Greening Your Small Business

By kmurray, Contributor and Moderator
Published: April 21, 2014 Updated: September 16, 2016

Being “green” or environmentally friendly is probably not a new idea to you as a small business owner. In the last few years especially, the discussion of green business practices, services and products has become so prevalent that it’s often no longer the exception – but expected – to run a more earth-conscious operation. Consider these ways to green your business without breaking the bank.

Reduce travel with virtual meetings

Do you find yourself traveling for business or to meet clients? Consider reducing the number of in-person meetings you might do and go virtual instead! You’ll reduce your fuel consumption, which is good for you and the environment. Plus you’ll save money with all the free online conferencing tools available. A number of free and low-cost web-based sharing sites have features that allow you to video conference, share screens, use text chats, upload documents, simulate a white board and more. An added bonus? Think of the time you’ll save by not hitting the pavement.  

Ditch the disposables (cups, cutlery, etc.)

Did you know that in just one year, the average American office worker goes through around 500 disposable cups? It’s also been reported that Americans throw out enough paper disposable cups, forks and spoons every year to circle the equator 300 times! But you can make it easier to not be a part of this statistic in the workplace.

Instead of supplying the office with paper and plastic goods for coffee and lunches, switch to cutlery you’ll keep! Sure, you might spend a few more dollars up front establishing a stock of cups, plates and silverware – but you’ll make that money back and keep more trash from landfills. Looking for an even better deal? Visit a discount or thrift store to score your new kitchenware for less than you might pay otherwise.

Save energy – with paper!

Sure, you’ve heard about using sleep modes for devices and unplugging when electronics aren’t in use. But did you know that your business' paper use is another area to save energy? Paper manufacturers in the U.S. consume a significant amount of energy each year producing paper. Then there’s the energy spent harvesting and shipping trees, and shipping paper products to your business!

To optimize your use of this valuable resource, be sure to use double-sided printing and copying. Even better – distribute or reference documents electronically instead, if possible. When making your paper purchases, select products with a high recycled content; then continue the trend and recycle as much of it as you can when you’re through!

This is just the beginning of what you can do to have a “greener” business operation. For more tips and insight, check out SBA’s energy efficiency and green business guides. From energy savings calculators to industry-specific materials and more, you’ll find a wealth of information about being an environmentally responsible small business owner.

Related Resource

About the Author:

kmurray
Katie Murray

Contributor and Moderator

I am an author and moderator for the the SBA.gov Community. I'll share useful information for your entrepreneurial endeavors and help point you in the right direction to find other resources for your small business needs. Thanks for joining our online community here at SBA.gov!

Virtual Currency and Your Business

By BarbaraWeltman, Guest Blogger
Published: April 17, 2014

Bitcoin is a digital currency now used as medium of exchange by more than 10,000 businesses. Last year Apple applied for a patent on iMoney, another form of virtual currency, so it’s likely that using virtual currency as another payment method is something to be considered. How does this impact your business? The IRS says that convertible virtual currency, which is digitally traded between users and can be purchased for, or exchanged into, U.S. dollars or other real or virtual currencies, is property, not currency. Here’s what this means for you.

Receiving payment in bitcoin

If you receive bitcoin as payment for goods or services, you’re taxable on this payment in the same way you’d be taxed if you’d received any other type of property. You must include in gross income the fair market value of the bitcoin on the date it is received. For example, if you are an independent contractor paid in bitcoin, its receipt is income, and it is also subject to self-employment tax.

Determining fair market value may not be so easy. If the virtual currency is listed on an exchange and the rate is set by supply and demand, then this rate — on the day it is received — can be used for fair market value. There are several exchanges for bitcoin; both the buyer and seller must be listed on the same exchange to give and receive payment in this virtual currency.

The customer may have a gain or a loss when making a payment to you; it all depends on his or her basis in the bitcoin. If this is less than the cost of the goods or services, then the customer has a gain. For example, the customer bought the bitcoin for $5 and used it to pay for your cupcake costing $7. The customer’s basis is $5 and effectively acquired property for $7, so there’s a $2 gain. If the opposite is true, then there’s a loss. Whether the gain or loss is capital gain or loss or ordinary gain or loss depends on the person (usually capital gain or loss unless the person is a trader in bitcoin) and not on what is being bought with the bitcoin.  If the customer has a capital transaction, then whether it’s short-term or long-term gain or loss depends on how long the bitcoin was held (more than one year is long-term).

Using bitcoin as payment for employees

If you pay an employee in bitcoin, it’s treated as an “in-kind payment” and the fair market value of the payment subject to payroll taxes. This means you have to withhold income tax on the payment as you would for any other compensation made in property. And you must take the payment into account for FICA (Social Security and Medicare) taxes and FUTA (federal unemployment) tax. For withholding purposes, check with your payroll company if you use one or IRS Publication 15 for more on noncash wages.

Information reporting for bitcoin

The fact that you’re making payments in something other than money does not mean you’re relieved of reporting transactions to the IRS. Some information returns you may need to file or will receive:

  • Form 1099-MISC if you pay an independent contractor in bitcoin and total payments for the year to this person are $600 or more. If you’re a contractor being paid in virtual currency, expect to receive a 1099.
  • Form 1099-K if, as a merchant, you have more than 200 transactions totaling more than $20,000 for the year; the bitcoin exchange will issue this to you.
  • Form W-2 if you pay an employee in bitcoin, regardless of amount.

Customers using bitcoin may have to complete Form 8949 to list all of their purchases with virtual currency and then transfer the total to Schedule D of Form 1040; the IRS hasn’t given guidance about this reporting. Once they learn about this onerous reporting (if this becomes the requirement), they may not want to do business using bitcoin.

Conclusion

As businesses adapt to changing technology, the tax law won’t be far behind. If you have particular questions about how bitcoin may impact your business, contact your tax advisor.

About the Author:

BarbaraWeltman
Barbara Weltman

Guest Blogger

Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BigIdeas4SB or at www.BigIdeasforSmallBusiness.com

Franchise Ownership Success Starts With Great Training

By FranchiseKing, Guest Blogger
Published: April 15, 2014

When you buy a franchise, you’re paying for the right to use the franchisors proprietary systems. Some of these include their marketing systems, computer and software systems, inventory management systems and more.

But, you won’t be able to use any of their business systems unless you know how to use them. That’s where the franchisors formal training program comes in. It’s part of what you’re paying for when you purchase a franchise

Are Franchise Training Programs Good?

I can’t think of one occasion in which a client of mine told me the training they received from their franchisor was disappointing. But, since this is your money we’re talking about…it’s you that will be buying the franchise, it’s important for you to make sure the training you’ll receive from franchise headquarters will be good. Here’s how:

Call existing franchisees of the franchise concept you’re thinking of buying and ask them to share their views on the training they received. It should be part of your due diligence.

Types of Franchise Training

These days, technology plays a major part of company training programs. Expect the franchisor to utilize technology in their training program.      

One way franchisors use technology to train their franchisees is to have some setup online. That’s right: Part of your training may be online. I’ve seen franchisors do what’s called pre-training online. Pre-training takes place a few weeks before you arrive at franchise headquarters for in-person training. I’ve found pre-training to be a great way for new franchisees to get their feet wet and have a head start on what’s to come when they arrive at headquarters for more intensive formal training. 

The formal, in-headquarters training will end up having the biggest impact on you. The training that takes place at headquarters is pretty intensive. It’s designed to prepare you for all of your day-to-day activities as a franchise owner. You’ll go through the entire operations manual. You’ll be trained on things like:

·        Computer systems

·        Inventory systems

·        Point of sale systems

·        Payroll management

·        Sales

·        Marketing

·        Advertising

·        Customer service *

You’ll learn a lot in a short period of time. (Training programs at franchise headquarters are usually 3-5 days in length)

If the thought of learning everything about running your new franchise business in a few short days sounds overwhelming, you’re not alone. Every franchisee before you thought the same exact thing, and their businesses are up and running. Yours will be too.

You could always ask some of the existing franchisees if the training they received prepared them to open and run their businesses adequately. The answers you get will give you a good idea of the quality of the franchisors training program. And, you’ll get a good idea of what to expect as a new franchise owner early on in your business. 

Franchisors want you to be successful. They know you’ll be apprehensive in the weeks and days before you actually open. Their training programs are designed to make sure you’re ready.

*Non-US Government link.

About the Author:

FranchiseKing
Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and recently launched Franchise Business University.

Build Your Business with a Great Web Presence

By bridgetwpollack, Guest Blogger
Published: April 14, 2014

47% of small businesses don’t have a website. Can you believe it? Establishing a web presence is easier than ever these days and there are so many tools out there that will make it quicker and more influential on your bottom line than ever before. Here are 3 resources that will not only convince you that every small business should have a great website, but guide you in exactly how to make that a reality – as painlessly and effectively as possible.

Make Your Website Work for You

Do you have one of the 95% of small business websites that isn’t mobile-optimized? Get ahead of trends, stand out from your competition and make it as easy as possible for customers to connect with your business by providing them with an easy, enjoyable web impression. The new infographic by SCORE, “Making Your Website Work,” shares the real, hard numbers that put the value of mobile-friendly small business websites, online marketing and SEO into perspective. Did you know:

·         97% of consumers look online for local products and services?

·         70% of smartphone owners have connected with a local business after a search?

·         70-80% of searchers ignore paid ads and focus on search results?

The infographic compiles 9 statistics about small business website usage into 3 actionable tips to help you make the most of your business’s web presence.

Optimize Your Site Design

So you’re finally convinced - you have a website, but how can you tell if it’s really adding to your bottom line? And adding the absolute most that it could be? SCORE mentor and entrepreneur Dan Beldowicz presents an online workshop, “Winning with Websites” in which you’ll learn:

  • How website design can make or break your online success
  • Why going mobile is a MUST
  • The truth about mobile apps
  • How & when to hire a web developer

Listen and watch as Dan explains how to optimize your web presence.

Create a Great Customer Call to Action (CTA)

Finally, you’ve got to tell customers exactly what you want them to do next. If it’s unclear or if there are too many competing options, they’ll navigate away from that one important click you really want them to make. Daniel Kehrer, founder of BizBest.com, says, “A strong CTA makes it clear what action the customer is expected to take, and why.” How does that translate for your specific business? He says, “Your approach depends on the action you want to motivate. For example, if the goal is to spur a purchase, and you’ve already communicated benefits, a simple ‘Buy Now!’ might be all you need.”  Daniel explains in further detail and shares 10 tips for creating strong calls to action to help you turn your heard-earned web visitors into revenue.

By now, I hope you are completely convinced that a user-friendly, informative and helpful website is a must for your business and you know how to convert your newfound prospects into loyal customers. The online experience really does reflect the way you would drive sales at your storefront on Main Street: have an easy to find location, create an enjoyable, uncluttered experience and communicate exactly how customers can follow through to your end goal. And to make sure you stay on the right path to your end goal, be sure to get a SCORE mentor to be your sounding board.

About the Author:

bridgetwpollack
Bridget Weston Pollack

Guest Blogger

Bridget Weston Pollack is the Vice President of Marketing and Communications at the SCORE Association. She is responsible for all branding, marketing, PR, and communication efforts. She focuses on implementing marketing plans and strategies to facilitate the growth of SCORE’s mentoring and trainings services. She collaborates with SCORE volunteers and develops SCORE’s online marketing strategy.

Build Your Business with a Great Web Presence

By bridgetwpollack, Guest Blogger
Published: April 9, 2014

47% of small businesses don’t have a website. Can you believe it? Establishing a web presence is easier than ever these days and there are so many tools out there that will make it quicker and more influential on your bottom line than ever before. Here are 3 resources that will not only convince you that every small business should have a great website, but guide you in exactly how to make that a reality – as painlessly and effectively as possible.

Make Your Website Work for You

Do you have one of the 95% of small business websites that isn’t mobile-optimized? Get ahead of trends, stand out from your competition and make it as easy as possible for customers to connect with your business by providing them with an easy, enjoyable web impression. The new infographic by SCORE, “Making Your Website Work,” shares the real, hard numbers that put the value of mobile-friendly small business websites, online marketing and SEO into perspective. Did you know:

·         97% of consumers look online for local products and services?

·         70% of smartphone owners have connected with a local business after a search?

·         70-80% of searchers ignore paid ads and focus on search results?

The infographic compiles 9 statistics about small business website usage into 3 actionable tips to help you make the most of your business’s web presence.

Optimize Your Site Design

So you’re finally convinced - you have a website, but how can you tell if it’s really adding to your bottom line? And adding the absolute most that it could be? SCORE mentor and entrepreneur Dan Beldowicz presents an online workshop, “Winning with Websites” in which you’ll learn:

  • How website design can make or break your online success
  • Why going mobile is a MUST
  • The truth about mobile apps
  • How & when to hire a web developer

Listen and watch as Dan explains how to optimize your web presence.

Create a Great Customer Call to Action (CTA)

Finally, you’ve got to tell customers exactly what you want them to do next. If it’s unclear or if there are too many competing options, they’ll navigate away from that one important click you really want them to make. Daniel Kehrer, founder of BizBest.com, says, “A strong CTA makes it clear what action the customer is expected to take, and why.” How does that translate for your specific business? He says, “Your approach depends on the action you want to motivate. For example, if the goal is to spur a purchase, and you’ve already communicated benefits, a simple ‘Buy Now!’ might be all you need.”  Daniel explains in further detail and shares 10 tips for creating strong calls to action to help you turn your heard-earned web visitors into revenue.

By now, I hope you are completely convinced that a user-friendly, informative and helpful website is a must for your business and you know how to convert your newfound prospects into loyal customers. The online experience really does reflect the way you would drive sales at your storefront on Main Street: have an easy to find location, create an enjoyable, uncluttered experience and communicate exactly how customers can follow through to your end goal. And to make sure you stay on the right path to your end goal, be sure to get a SCORE mentor to be your sounding board.

About the Author:

bridgetwpollack
Bridget Weston Pollack

Guest Blogger

Bridget Weston Pollack is the Vice President of Marketing and Communications at the SCORE Association. She is responsible for all branding, marketing, PR, and communication efforts. She focuses on implementing marketing plans and strategies to facilitate the growth of SCORE’s mentoring and trainings services. She collaborates with SCORE volunteers and develops SCORE’s online marketing strategy.

Make Your Small Business Easily Found Online

By bridgetwpollack, Guest Blogger
Published: April 9, 2014

If you’re looking to ramp up your business’s online presence and help your potential customers find you more easily, you may have considered a variety of web advertising options: banner ads, social media ads, pay-per-click sponsor ads, SEO, SEM, etc. What’s the most effective route to take? What’s the least costly?

The new infographic, Online Advertising: Go for the Right Audience and You'll See Real Results, compiled research on the effectiveness of various types of online advertising options for small business owners. It found that one-third of small and mid-sized businesses buy online advertising, spending an average of $6,800 annually. Some interesting findings to note in your own online advertising pursuits:

  • A typical person sees 1,700 banner ads per month, but clicks just 0.1% of the time.
  • 3% of small business owners think that pay-per-click ads are effective.
  • 77% of ads are never seen.
  • Investment in social media ads has increased from $3.8 billion in 2011 to $5.9 billion in 2013. This amount is projected to increase to $9.8 billion in 2016.

Check out the infographic for the full story on how small businesses like yours are taking advantage of online advertising and to see how Facebook, Twitter and LinkedIn compare in terms of click-thru rates and ROI.

Pay for Traffic or Get it Free?

Given those survey results, you might be wondering if paid ads are worth the financial investment. SCORE mentor and owner of A&E Advertising and Web Design, Edison Guzman, answers exactly that question in the (appropriately titled) online workshop, “Pay for Traffic or Get it Free? (The Difference Between SEM and SEO).” Edison says the key to choosing the right strategy is: “before starting any campaign, you need to know the result.” What type of online presence are you looking to promote? Who and where is your target audience? How much are you willing to spend? Who will implement this strategy? These questions will help you determine the right approach for achieving your goals.

Listen in to this online workshop to find out:

  • The tools needed to get the most out of your time and investment in online advertising
  • The difference between on-page SEO and off-page SEO and how to maximize both
  • The 7 parts of your website that tell search engines how to rank you
  • How social media plays a role in your search engine ranking
  • And… the only guaranteed way to rank on Page 1 of search engine results in less than 1 day

Make Content Work for You

You’ve certainly heard that content marketing is the next big thing for positioning yourself as the go-to resource in your industry. But it’s also an absolutely critical (and often free) way to get your business better known to the search engines. In his 4 part series, How to Win the New Game of Semantic Search, Bill Merrow, co-founder of Synergy Sales and Marketing, covers everything you need to know to get search engines to authenticate your website and, ultimately, bring you more and better visitors. Bill says “In September 2013, Google’s Hummingbird update rocked the world of every business concerned with search marketing, as simple keyword strategies were detonated and Google stopped reporting keywords in Google Analytics.” Therefore, he explains, content marketing is a necessary tactic for effective SEO. In the series, Bill details the 4 components to properly implementing an effective content strategy: volume, velocity, variety and veracity.

The more you know about effective online advertising, the more you realize what a powerful tool it can be for bringing potential customers in the virtual door. It doesn’t have to be costly but it can require a time investment to learn the tools at your disposal and decide what works best for reaching your target audience. If you’re not sure who that is or how to reach them, reach out to a SCORE mentor for free, expert help.

About the Author:

bridgetwpollack
Bridget Weston Pollack

Guest Blogger

Bridget Weston Pollack is the Vice President of Marketing and Communications at the SCORE Association. She is responsible for all branding, marketing, PR, and communication efforts. She focuses on implementing marketing plans and strategies to facilitate the growth of SCORE’s mentoring and trainings services. She collaborates with SCORE volunteers and develops SCORE’s online marketing strategy.

Crowdfunding Sites: Top 3 Tips to Get Funding Once and For All

By Marco Carbajo, Guest Blogger
Published: April 9, 2014

The internet has fundamentally changed the way we do business on a national and global scale. With over 2 billion internet users and growing, the speed and the way in which we communicate, share ideas, and even invest in businesses have changed forever.

Now anyone with a computer or mobile device and an internet connection can research, review and become an investor in a business with a push of a button. With the growing popularity of crowdfunding sites, it's clear the idea of advertising to the general public through a crowdfunding platform is far more effective at drawing in investors as opposed to finding traditional investors the old fashion way.

To put it bluntly, crowdfunding empowers entrepreneurs.

It offers them the ability to raise capital without giving up equity or accumulating debt. Instead, these rewards-based crowdfunding platforms allow entrepreneurs to raise capital from the public in exchange for tangible products or other relative rewards.

It’s simply one of the best ways to cast a huge net for attracting investors to a business. However, with all the hype and popularity buzzing around the internet, many entrepreneurial hopefuls need to be aware that just because launching a crowdfunding campaign is simple doesn’t mean it’s easy.

There is a big misconception on what it really takes to reach a funding goal and achieve success in crowdfunding. It’s not as simple as creating a campaign and clicking the submit button and waiting for an idea to go viral. The set it and forget it attitude is the number one reason why crowdfunding campaigns fail.

Did you know of the roughly 60,000 unsuccessful crowdfunding campaigns launched, about 40,000 failed to reach even 20% of their funding goal? The good news is you can succeed in crowdfunding, you just need to know how to prepare for it.

Here are three key tips for crowdfunding success:

1) Perfect Your Pitch – An incredible pitch is crucial for crowdfunding and can make or break landing an investor. People have to be sold on you, your idea and your vision before they will ever invest in your business.

For starters, write up your preliminary draft, include pictures and record a video explaining your vision, the offer and why you should get business funding. Let your passion shine through!

Send your pitch to family and friends so you can get feedback and make any necessary changes. Once you perfected the pitch, start locating initial backers before launching your campaign.

Remember, you don’t have to swim with the sharks; in crowdfunding, you get to swim with the goldfish.

2) Test Your Rewards – Every successful campaign started with a dedicated following. The obvious rewards would be to provide backers with a digital copy, physical product, souvenirs, combined rewards, etc. depending on your business idea.

Start by testing your reward ideas with your personal network, make necessary adjustments and perfect your rewards package so it is unique, eye-catching and memorable.

3) Get Pre-Pledges – Pre-pledges are commitments from those people who fully support your business idea and will be there to invest on day one when you launch your campaign. Since the majority of crowdfunding sites provide a 30-90 day time frame for each campaign, it’s vital to launch with momentum.

Did you know the most successful crowdfunding campaigns had their campaigns go live only after they had 20-30% of their business funding secured by initial backers? Let's face it; nobody wants to be the first person to fund money into a newcomer's campaign.

Once you perfect the pitch, test your rewards, get pre-pledges and choose a reputable crowdfunding platform, you will need to establish a marketing strategy to reach your target audience so you can advance the momentum of your campaign once you go live.

Crowdfunding sites are a strong stepping-stone for acquiring investors for a business. While for some it can be a viable option, entrepreneurs do need to conduct their due diligence to decide if this business funding option is best for them.

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.

What to Know About Small Business Investment Companies (SBICs)

By kmurray, Contributor and Moderator
Published: April 9, 2014 Updated: April 9, 2014

When it comes to financing, you probably already know that SBA doesn’t lend money directly to small business owners and entrepreneurs, but has various programs to help get small business ventures financed through local lenders. But did you also know that the Small Business Investment Company (SBIC) Program has been helping small business access capital for more than fifty years?

 

What’s the SBIC Program?

The Small Business Investment Company (SBIC) Program is a multi-billion dollar program that, in fiscal year 2013 alone, invested $3.5 billion in financing dollars to small businesses! So how does it work?

SBICs are privately owned and managed investment funds. They’re licensed and regulated by SBA and use their own capital plus funds – borrowed with an SBA guarantee – to make equity and debt investments in qualifying small businesses.

The SBA doesn’t invest directly into small business through the SBIC Program, but provides funding to qualified investment management firms that are experts in certain sectors or industries. For every $1 an SBIC raises from a private investor, the SBA will typically provide $2 of debt capital (with a cap of $150 million). Here’s a look at how it works:

SBIC flow chart depicts private investor funds and SBA funds funneling into SBICs funneling into small businesses

Firms combine their own capital with funds borrowed from the federal government at low rates. In turn, they invest these funds in promising new ventures. And it’s all done with zero taxpayer dollars!

 

What are the benefits of the SBIC Program?

There are benefits for the SBICs and the small business recipients!

Small businesses that qualify for assistance from the SBIC program can receive equity capital, long-term loans and expert management assistance. SBICs benefit small business owners by opening up greater access to equity capital and expert guidance they may not otherwise get through traditional venture capitalists.

Investment managers participating in the SBIC program can add to their own private investment capital with funds borrowed at favorable rates through the federal government.

And ultimately, the national economy benefits from the SBIC program as the small businesses financed by SBICs continue to create jobs and generate tax revenues over the program’s life.

 

Want to learn more about the SBIC Program? Visit the SBIC Program pages, including the FAQ. Still have questions? Email askSBIC@sba.gov.

About the Author:

kmurray
Katie Murray

Contributor and Moderator

I am an author and moderator for the the SBA.gov Community. I'll share useful information for your entrepreneurial endeavors and help point you in the right direction to find other resources for your small business needs. Thanks for joining our online community here at SBA.gov!

To request a copy of the archived documents listed below, please contact the Office of Advocacy via email at advocacy@sba.gov.

February 12, 2003 - Final rule, National Pollutant Discharge Elimination System Permit Regulation and Effluent Limitations Guidelines and Standards for Concentrated Animal Feeding Operations published in the Federal Register.

 

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