Starting a small business is an exciting adventure. However, it can also be frustrating, confusing, and difficult for those new to entrepreneurship. Fortunately, the U. S. Small Business Administration (SBA), SCORE, and Small Business Development Centers (SBDC) are available to assist new business owners, entrepreneurs exploring new business ideas, and established businesses looking for ways to expand.
The SBA offers free business counseling and assistance through a partnership with SCORE and SBDC, as well as assistance with grants and financing. However, the SBA does not make direct loans to entrepreneurs. Instead, it provides a guarantee to banks and lenders for the money they lend to small business owners. This guarantee protects the lender’s interest by promising to pay back a portion of the loan if the business owner defaults on the loan. Therefore, when a business applies for an SBA loan, it is actually applying for a commercial loan through a bank or authorized SBA lender, structured according to SBA requirements with an SBA guarantee.
Columbus District Director of the SBA Martin Golden said, “It’s an encouragement to banks to make loans to otherwise qualified businesses who may be lacking in collateral or may be lacking in some way.”
“It’s not the cheapest money in town,” said Golden. “The borrower could probably get cheaper financing on their own…but it is good if the borrower cannot get financing otherwise and the bank doesn’t want to provide it without the SBA backstop, then our loan programs provide that.”
He added that, through Sept. 30 the SBA has extended some incentives for small businesses to seek SBA backed loans.
Golden said the SBA offers many resources, which fall easily into three categories, ““We call it the 3 Cs: Access to capital, access to help with government contracting, and access to counseling.”
The local SBDC, through its SBA partnership, helps provide the 3 Cs by assisting entrepreneurs in finding SBA lenders, as well as setting up a business plan and other guidance.
“We provide basically any type of service that a small business owner could be looking for,” said Michalina Lacy, a business advisor with SBDC in Shelby.
Both Michael Fender, who is opening a Papa John’s Pizza in Galion, and Lisa Fagan, who recently opened Grammy’s Room in Shelby, have worked with the SBDC.
Fender said this is his first entrepreneurial enterprise, and although the business bears a franchise name, it is still a locally-owned small business. He received an SBA 7a General Business Loan with assistance from the SBDC.
“Working with Machalina, she was a very big help. If it hadn’t been for her, I’d still be trying to acquire everything: my business package, business plan, projections,” said Fender.
Fender noted a standard bank loan would have required more collateral than the SBA loan he received, and he feels the SBDC was instrumental by helping him locate the right bank to work with. However, he also noted that the SBA loan required much more information than he thought a standard commercial loan would require. “They ask for things you would think normally they don’t need…it had its ups and downs, and overall it wasn’t a bad experience,” he added.
Although Fender is a Technical Sergeant E6 with the National Guard and has been with them for 14 years, he said he did not qualify for a veteran’s loan backed by the SBA, but did receive a break on closing costs due to veteran’s status.
Fender hopes to open the doors of his new Papa John’s restaurant in March at 216 Portland Way North in the Galion West Shopping Center.
Fagan’s shop, Grammy’s Room, which opened in November at 42 East Main Street in Shelby, is what Fagan calls “an artisan co-op.” “What I’ve done is collect different vendors, who have different skills, different products, different talents, and we’re throwing it all in together and this is what I’ve come up with,” she said, gesturing to the eclectic collection of items artfully displayed in her shop.
Fagan said she met the SBDC through the Shelby Area Business Group. The SBDC, she noted, has assisted her in setting up consignment contracts and inventory sheets, as well as helping her discover what is required of a retail business.
“I didn’t know I had to register with the secretary of state,” Fagan noted. “You have to register a fictitious name [the store name] with the secretary of state.”
“There’s been all these hoops you have to jump through. Sometimes they seem to get smaller and smaller,” she said.
The SBDC, she noted, has helped a great deal with jumping through those hoops.
Fagan, a bridal and formal seamstress, plies her trade in a section of the shop, and hopes to expand in the spring. The shop will allow a bride’s family and friends the chance to browse while she is being fitted.
Fagan noted she is actively seeking new vendors. Interested parties may contact her at 419-989-3664.
Golden said, “I want to encourage businesses to look at SBA.gov. We have great counseling resources; we have over 150 online training courses, chats, and videos, and even resources in Spanish. Take the time to check us out. They’ll be happy they did.”
