Alternative Venture Finance: Federal Grants and Loans

While most companies seeking venture capital initially think about angel investors and venture capitalists, a large alternative source of financing is federal grants and loans. The two largest federal grant programs are run by the Small Business Administration (SBA), and by Small Business Investment Companies (SBICs).

An SBA loan, regardless of whether it is a direct loan from the SBA, or, as is more common, a bank loan guaranteed by the SBA, is essentially a bank loan. The benefit of it versus a traditional bank loan is the rate. SBA rates are typically much less than traditional business loan rates.

In most cases, in a guaranteed SBA bank loan, the SBA guarantees 90 percent of the loan will be repaid to the bank. As such, banks are at much less risk than in most other loans, and are a bit more flexible with regards to who they offer these loans. However, the SBA usually requires the founders of the company to personally guarantee the loans, which makes them risky should the venture collapse.

Alternatively, Small Business Investment Companies (SBICs) are privately organized corporations that are licensed and regulated by the SBA. Small or emerging businesses which qualify for assistance from the SBIC program can receive equity capital and/or long-term loans from these companies. Essentially, these companies provide their own capital, which is supplemented by federal funds, to the companies they fund.

Interestingly, U.S. taxpayers benefit from the SBIC program as tax revenues generated from successful SBIC investments have more than covered the cost of the program. Likewise the program has created hundreds of thousands of jobs.

In summary, SBA and SBIC financing are viable alternatives to financing from angel investors and venture capitalists and should be considered in the capital raising process. Similarly to angel and VC financing, companies seeking SBA and SBIC financing need a strong management team and value proposition, and a highly professional and compelling business plan in order to raise the capital they need.

Growthink Business Plans have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. Growthink has become the firm of choice for venture capital firms, angel investors, corporations and entrepreneurs in the know. To download the Free 2005 Business Plan Guide, please visit http://www.growthink.com/businessplan

---

Finding the Best Secured Loan for Your Money

If you're looking for a secured loan, there are several... Read More

Finance Your Home Business: Six Ways Under Your Nose

There are lots of ways to get additional capital to... Read More

Fast Cash Personal Loan - No Credit Check and Very Quick

You can get a payday advance with cheap rates and... Read More

Financial Openings Without Warranty Alias Unsecured Personal Loans

Isn't it the trillionth article on unsecured loans? All are... Read More

Military Payday Loans ? When?s The Best Time To Avail Of These?

What are the opportune times to avail of military payday... Read More

Unsecured Loans: The Lesser Known Sibling Of Secured Loans

What is man's greatest invention?Some of the latest gizmos would... Read More

No Income Verification Home Equity Loan

A no income verification home equity loan is a second... Read More

Bridge Loans: Everything You Wanted To Know

As the name implies, bridge loans fulfill a vital need... Read More

What Is A Personal Loan?

Personal loans can be divided into two categories: secured personal... Read More

Secured Business Loans ? Equipping Your Business Blueprint With Concrete Groundwork

Somebody once said, 'Business is not financial science; it's about... Read More

Finding the Right Online Loan for You

If you're looking for an online loan, you might be... Read More

No Credit Check Payday Cash Advance Loan - Benefits to Using a Payday Loan

No Credit Check Payday Cash Advance Loan - Benefits to... Read More

Getting the Best Auto Loan Rates

Getting a good auto loan rate is not luck, but... Read More

A Borrowers Guide to Bad Credit Loans UK

If you find yourself in a situation where you need... Read More

Home Loans in the UK

Owning a home is the most important dream of any... Read More

Understanding Personal Loans, Cash Advances and Payday Loans

Have you ever been short on cash? Has an unforeseen... Read More

Bad Credit Loans

Obtaining bad credit loans can be a real challenge. If... Read More

Lions and Loans: Why Finance Should Always be Personal

Different types of loans are available for almost every aspect... Read More

Simple Tips On Getting Your Loan

So, you want to get a loan?Here are some simple... Read More

Law Practice Finance

How do you finance a growing practice? It is impossible... Read More

To Find The Right Loan You Must First Find The Right Lender

We have found internet shoppers to be the savviest in... Read More

Money With The Click of a Mouse

Online payday loans seem to be popping up everywhere. A... Read More

Where to Look for a Cheap Personal Loan

Looking for a cheap personal loan can sometimes be a... Read More

No Credit Car Loans - Even With No Credit History, You Can Still Get Approved

Even it you have no credit history, you can still... Read More

SBA Loan: Options, Benefits, and Lenders Part 2 of 2

In this second installment, we will further examine what kinds... Read More

Finding A Thin Credit Or No Credit Motorcycle Loan

It is no secret that thin or no credit can... Read More

Bank Auto Loans ? Best Loans for Stretch Commuters?

People have to work to survive. The desire to maintain... Read More

Be Wary of Guaranteeing a Loan

You need to be wary of guaranteeing a loan. What... Read More

Relax, Unwind, and Enjoy With American One Secured Personal Loans

Secured Personal Loans are those loans against which you don't... Read More

Where to Look for a Fast Homeowner Loan

If you're looking for a fast homeowner loan, you might... Read More

Payday Loans: How They Really Work!

Payday loan companies gives the borrower the amount of the... Read More

Boat Loans ? Steering Way Towards a Bon Voyage

In the full moon night, on a lovely morning you... Read More

Secured Car Loan - if Car Signifies a Second Home to You

Cars ? they are your passion, necessity, luxury, earning member.... Read More