Like many entrepreneurs, Campbell McKellar had an innovative idea but a lack of funding. Her website, Loosecubes, aims to link people looking for workspace with companies interested in renting extra desks in their offices. Earlier this year she began a search for money to get a beta version of the site up and running.
McKellar, who was working as the Chief Financial Officer of a real estate development company, stumbled upon a resource just around the corner, the Small Business Development Center at New York City College of Technology. There she met Jose Manuel De Jesus, an advisor, who helped her shape a business plan that was likely to appeal to lenders. Then he introduced her to a bank that has a history of providing SBA-approved loans. Despite the company’s fledgling startup status, McKellar received her loan three months later.
For entrepreneurs like McKellar, Small Business Development Centers can be a lifesaver. Over 900 of these centers, funded partially by the U.S. Small Business Administration, are housed in colleges, universities, and local chambers of commerce. They often have long-term relationships with a host of lesser known banks and financial lending institutions, making them well placed to help locate and win funding. “Because of our network of contacts, we can help the entrepreneur figure out how to tell a story that lenders will find compelling,” says Ira Davidson, Director of the Pace University Small Business Development Center in New York.
The centers’ expertise extends beyond the financial sphere to marketing and branding. De Jesus, for example, recently worked with a restaurant to post a YouTube video, recruit a jazz band to perform, and establish a promotional deal with a local radio station. As a result, the restaurant has experienced “significant” pickup in sales.
Yet, while Small Business Development Centers are there to provide technical assistance to small businesses, the entrepreneur must play his or her role in getting the most of the relationship. For example:
Be patient. The centers have a strong success rate in finding lenders for clients, but wins do not happen overnight. The time frame varies depending on factors such as business growth outlook and available collateral. McKellar, for example, was able to find a loan quickly, but De Jesus points to a New York City based hair salon owner who waited more than a year for funding after approaching three different lenders.
Be prepared for paperwork. Searching for funding requires documentation of three years of personal and business taxes. Startups must have business plans with monthly revenue projects for two years. The paperwork can be daunting, but advisors can help tweak packaging to suit the needs of lenders. “You should regard them as experts in the industry of small business finance,” says McKellar. “They know how to put together a plan that will be approved.”
Be willing to put some skin in the game. According to Davidson, entrepreneurs expect to borrow 100 percent of what they need. However, that is an ambitious ask. Owners will be expected to provide at least some of their own funding. The exact amount varies, but it is likely to be at least 30 percent of total costs. Davidson explains, “There has to be an investment by the entrepreneur.”