The SBIC program purposes to provide creative and flexible loan options to small and newly established businesses. SBICs, or Small Business Investment Companies, have been providing capital to qualified small businesses since 1959, according to the Small Business Association. The SBIC is a privately owned investment fund licensed by the SBA to provide debt or equity financial assistance and management consulting to small businesses that meet preset conditions.
The SBIC program is strikingly different than applying for a loan through a traditional commercial bank. This program aims to help entrepreneurs, companies with smaller budgets and projects that are new and innovative.
Getting the lender interested
Preparing your small business loan proposal for consideration by a SBIC begins with searching a directory of firms in your geographical area that may have an interest in working with your business type. Each SBA licensed SBIC has funding requirements specific to their firm. It is important to familiarize yourself with the types of projects they fund and any criteria the lender specifies. During your search, consider the stage in the life cycle your business is in and compare it to the SBIC funding priorities. Contact the SBIC you identified during your search and speak with a project or loan officer about your business. Consider this an informal introduction. Ask questions, take notes and listen closely to any recommendations.
Keeping the conversation going
Evaluate your current business plan for compatibility with the SBIC criteria and additional information gleaned from the initial contact. There are several types of business plans, and you must ensure your plan is written in the format and presents the information the SBIC needs for consideration. The National Association of Small Business Investment Companies indicates your business plan should minimally present operations, management characteristics, current financial conditions, and funding requirements. Rewrite and reorganize your business plan to suit the conditions of the specific SBIC application. Pay careful attention to the financial section of the plan; it should explain how you plan to profit and what the funds will be used for in the plan.
Understanding the business plan
There are many types of business plans. Generally, a business plan includes the following sections:
- Executive Summary
- Business Description
- Market Summary
- Organization and Management
Schedule a formal presentation of your business plan once you are sure your plan format and content meets the criteria set forth by the SBIC. Make sure you have copies for everyone planned to meet with you, and several extras. Sample business plans, business plan templates, and information on growing your small business are available.