Pennsylvanians who have an idea for a product or service and want to start a business will have much to consider. One of the fundamental aspects of starting a business is having funding. While it is possible to go to a bank or other lending institution to get a loan, the process can be complicated and is hit or miss as to whether sufficient funds will be provided. Alternatives such as dipping into savings or mortgaging property can also get necessary startup money, but this is a major risk when done without other sources and protections.
Even the most comprehensive and well-thought-out business ideas sometimes fail leaving people who leveraged their future with seemingly infinite problems. Getting seed money from friends and family could work, but this too hinges on what is available. Often, none of these strategies are viable on their own. However, there is a program called the Small Diverse Business Capital Access Program (SDBCA) that is state funded and might be beneficial for qualified businesses.
What is SDBCA and is it a wise alternative to start a business?
This program is designed to help those who are starting a diverse business by granting them loans at a low interest rate and lines of credit to serve their business needs. The state benefits from these businesses succeeding as they may provide employment. Obviously, the business owner benefits by having reasonable terms in getting loans and lines of credit. This money can be used for any aspect of the business from acquiring land and building; moving forward with construction and renovating; purchasing items that will be needed; and having cash and credit available for the predictable and unforeseen occurrences that happen with any business large or small.
SDBCA is for minority owners, females, veterans or service-disabled people. It can have a maximum of 100 employees. There are limits to the funds that SDBCA will provide. People may get matching financing from outside lenders. The number of employees will also factor in with how much people can receive through SDBCA. For term loans, the amount is capped at $200,000; for lines of credit, it is $100,000. There are also requirements for collateral. Personal guarantees are often a sticking point for many people who are worried about their future. For people who will have at least 20% of ownership, they must provide this guarantee.
Funding and other aspects of a business may require professional help
Securing funding is just one part of running a business. While SDBCA might be an option for those who are starting out and meet the criteria, there are other issues that will inevitably arise and understanding business law is essential. That includes real estate, purchasing, dealing with employees, growing and more. From the outset, it is wise to have guidance for the entire process. Perhaps a person does not qualify for SDBCA. They might need assistance with other sources of financing and areas of the business. Consulting with those experienced in these matters is useful and should be a priority from the start to be fully prepared for every eventuality and to have a good chance at success.