Description
A Guide to Financial Resources for Small Business in North Carolina
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CAP I TA L OP POR TUNI T I E S FOR SMAL L BUS I NE SS E S
`
FOR SMALL BUSI NESSES
Prepared by the Small Business & Technology Development Center
A Gui de to Fi nanci al Resources
for Smal l Busi ness i n North Carol i na
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
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© 2013 by The University of North Carolina’s
Small Business and Technology Development Center (SBTDC)
5 West Hargett Street, Suite 600, Raleigh, NC 27601
phone: 919.715.7272
e-mail: [email protected]
website: www.sbtdc.org
All rights reserved.
No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording, or otherwise – without the prior
written permission of the publisher.
This material is based upon work supported by the US Small Business
Administration (SBA). Any opinions, findings, conclusions, or
recommendations expressed in this publication are those of the author
and do not necessarily reflect the views of the SBA.
The SBTDC would like to thank the following
for their valuable contributions to this guide:
Ashleigh Cates
Pete Donahue
Angela Farrior
Tim Janke
Eileen Joyce
Karen Hoskins
George McAllister
Bethany Sampson Morgan
David Morgan
Lisa Ruckdeschel
FEEDBACK
If you have any suggestions or questions about this guide,
please call 919. 715-7272 or e-mail [email protected].
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TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION ....................................................................................................................... 11
Purpose of this Guide ........................................................................................................................................ 11
CHAPTER 2: OVERVIEW OF FINANCING RESOURCES .................................................................................... 13
Getting Started .................................................................................................................................................. 13
Start-Up (or “Seed”) Stage ................................................................................................................................ 13
Personal Assets ............................................................................................................................................. 14
Family and Friends ........................................................................................................................................ 14
Home Equity Loans or Credit Lines ................................................................................................................ 14
Growth Phase .................................................................................................................................................... 15
Internal Financing .......................................................................................................................................... 15
Cash Management Tools ............................................................................................................... 15
Accounts Receivable Management................................................................................................ 15
Inventory Control .......................................................................................................................... 15
Electronic Commerce..................................................................................................................... 16
Barter ............................................................................................................................................. 16
External Financing ......................................................................................................................................... 16
Short-term Financing ..................................................................................................................... 17
Long-term Financing ...................................................................................................................... 18
Debt Financing ............................................................................................................................... 18
Equity Financing ............................................................................................................................ 18
Debt Financing vs. Equity Financing ............................................................................................... 19
Debt-to-Equity Ratio ...................................................................................................................... 19
Grants ............................................................................................................................................ 22
CHAPTER 3: FINANCIAL INSTITUTIONS ........................................................................................................ 23
Commercial Banks ............................................................................................................................................. 23
Savings Institutions............................................................................................................................................ 24
Non-Bank Lenders ............................................................................................................................................. 24
Asset-Based Lenders...................................................................................................................................... 24
Purchase order financing ............................................................................................................... 25
Specialized Asset-Based Lenders ................................................................................................... 26
Factors or Factoring Companies .................................................................................................... 26
Leasing Companies ........................................................................................................................ 28
Credit Unions ..................................................................................................................................................... 30
Community Development Credit Unions (CDCUs) or Community Development Corporations
(CDCs) ............................................................................................................................................ 32
Veteran Direct Loan Program ........................................................................................................ 32
North Carolina Minority Support Center ........................................................................................................... 32
CHAPTER 4: FEDERAL GOVERNMENT SOURCES ........................................................................................... 33
U.S. Small Business Administration (SBA) ......................................................................................................... 33
7(a) Loan Guaranty Program ......................................................................................................................... 34
Restrictions on Eligibility of Businesses ......................................................................................................... 35
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Loan Maturities ............................................................................................................................................. 36
Interest Rates and Fees ................................................................................................................................. 36
SBA 7(a) Programs ........................................................................................................................................ 36
The Preferred Lenders Program (PLP) ........................................................................................... 36
SBA Express Program ..................................................................................................................... 37
SBA Patriot Express Loan ............................................................................................................... 37
SBA Military Reservists Economic Injury Loans .............................................................................. 37
EXPORT FINANCING ...................................................................................................................................... 38
Export Express Loan Program ........................................................................................................ 38
The Export Working Capital Guarantee Program........................................................................... 38
The International Trade Loan Program .......................................................................................... 38
SBA Community Advantage Program ........................................................................................................... 39
Short-term Loans and Revolving Lines of Credit (CAPLines) ......................................................................... 40
Community Adjustment & Investment Program (CAIP) ................................................................................ 40
Pollution Control Loan ................................................................................................................................... 40
Defense Loan and Technical Assistance Program (DELTA)............................................................................ 41
SBA Micro Loans and Other Lending Programs ............................................................................................ 41
SBA Microloan Program ................................................................................................................. 41
SBA Intermediary Lending Pilot in North Carolina - The Support Center and NCEED ................................... 42
SBA Small Loan Advantage Program ............................................................................................................ 42
504 Certified Development Company Program ............................................................................................. 43
SBA Surety Bond Program ............................................................................................................................. 45
Small Business Investment Company (SBIC) Program ................................................................................... 45
Small Business Innovation Research (SBIR) / Small Business Technology Transfer (STTR) Programs ........... 47
Small Business Innovation Research (SBIR) ................................................................................... 47
Small Business Technology Transfer (STTR) ................................................................................... 49
Differences between SBIR and STTR .............................................................................................. 50
8(a) Program ................................................................................................................................................. 52
U.S. Department of Commerce .......................................................................................................................... 52
Economic Development Administration (EDA) .............................................................................................. 52
Revolving Loan Fund (RLF) ............................................................................................................. 52
Public Works and Economic Development Assistance................................................................... 53
Economic Adjustment Assistance .................................................................................................. 53
Economic Development Planning Assistance ................................................................................ 53
University Center Economic Development .................................................................................... 54
Research and Development ........................................................................................................... 54
Trade Adjustment Assistance for Firms (TAAF) Program ............................................................... 54
U.S. Department of Agriculture (USDA) ........................................................................................................ 56
Farm Service Agency ...................................................................................................................... 56
U.S. Department of Transportation (DOT) ..................................................................................................... 56
US Department of Transportation Short-Term Lending Program .................................................. 56
Rural Development Programs ............................................................................................................................ 57
Business and Industrial Loan Program .......................................................................................................... 57
Intermediary Re-lending Program (IRP) ......................................................................................................... 57
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Rural Business Investment Program (RBIP) ................................................................................................... 58
Rural Lender Advantage ................................................................................................................................ 58
B&I Guaranteed Loan Program ...................................................................................................... 58
USDA Rural Development .............................................................................................................................. 59
Area Offices ................................................................................................................................... 60
Rural Business Enterprise Grants ................................................................................................... 61
U.S. Department of Energy ................................................................................................................................ 61
Financial Opportunities for Inventors ............................................................................................................ 61
Basic Energy Sciences .................................................................................................................................... 62
CHAPTER 5: STATE GOVERNMENT SOURCES ............................................................................................... 67
NC Department of Commerce ........................................................................................................................... 67
Commerce Finance Center ............................................................................................................................ 67
Community Development Block Grant (CDBG) Program ............................................................... 67
Industrial Development Fund (IDF) ................................................................................................ 67
Job Development Investment Grants ............................................................................................ 68
Shell Building Program ................................................................................................................... 69
Industrial Revenue Bond (IRB) Program ........................................................................................ 69
NC Board of Science and Technology ................................................................................................................ 70
One N.C. Small Business Program ................................................................................................................. 70
Energy R&D Cost-Sharing Program ............................................................................................................... 71
Green Business Fund ..................................................................................................................................... 71
NC Qualified Investment Tax Credit .............................................................................................................. 71
Technology Development (R&D) Tax Credit .................................................................................................. 74
One North Carolina Fund .............................................................................................................................. 75
Credit for Worker Training............................................................................................................................. 75
Credit for Investing in Central Office or Aircraft Facility Property ................................................................. 76
Credit for Substantial Investment in other Property ...................................................................................... 76
Other Tax Credits and Incentives for Businesses ........................................................................................... 76
North Carolina Ports Tax Credit .................................................................................................................... 77
NC Agricultural Finance Authority................................................................................................................. 77
Farm Ownership Loan Program ..................................................................................................... 77
Agribusiness Loan Program ........................................................................................................... 77
Agricultural Development Bonds ................................................................................................... 77
Renewable Energy Property Tax Credits ........................................................................................ 78
NC Community College System ......................................................................................................................... 79
Economic & Workforce Development Services – Industry Training Program ................................................ 79
CHAPTER 6: EQUITY CAPITAL SOURCES ...................................................................................................... 81
Equity Funding “Food Chain” ........................................................................................................................... 81
Individual Investors (Angel Capital) .............................................................................................................. 83
Angel Funds and Networks ........................................................................................................................... 84
Venture Capital ............................................................................................................................................. 86
Stages of VC Financing ................................................................................................................... 87
Raising Venture Capital.................................................................................................................. 88
QuestMark Partners, LP ................................................................................................................................... 113
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Securities Offerings...................................................................................................................................... 115
Regulation D (Rule 504) ............................................................................................................... 115
Small Corporate Offering Registration (SCOR) ............................................................................. 115
Initial Public Offering (IPO) .......................................................................................................... 116
Joint Ventures and Strategic Alliances ......................................................................................... 117
Crowdfunding .............................................................................................................................. 118
CHAPTER 7: PRIVATE, NOT-FOR-PROFIT AND LOCAL PROGRAMS .............................................................. 119
NC Biotechnology Center (NCBC) .................................................................................................................... 119
Company Inception Loan ............................................................................................................................. 120
Small Business Research Loan Program (SRL) ............................................................................................. 120
Strategic Growth Loan (SGL) ....................................................................................................................... 120
Technology Enhancement Grant (TEG)........................................................................................................ 120
Business Acceleration and Technology Out-licensing Network (BATON) ................................................... 120
Business Development Loan Program ......................................................................................................... 121
Collaborative Funding Grant (CFG) Program .............................................................................................. 121
Small Business Innovation Research (SBIR) Bridge Loan............................................................................. 121
Entrepreneur Focused Support Groups, Councils and Networks ..................................................................... 122
NC Rural Economic Development Center .................................................................................................... 122
Microenterprise Loan Program .................................................................................................... 123
NC REAL Enterprises ........................................................................................................................................ 124
Defense Ventures Fund ............................................................................................................... 124
North Carolina Capital Access Program ....................................................................................... 125
North Carolina Rural Economic Development Center...................................................................................... 125
Clean Water Partners Program .................................................................................................... 125
Economic Infrastructure Program ............................................................................................... 126
Building Reuse and Restoration Grants ....................................................................................... 126
Rural Hope (Rural Health Care Initiative) ..................................................................................... 126
Rural Community Mobilization Project ........................................................................................ 126
Economic Innovation Grants Program ......................................................................................... 127
Project GATE (Growing America Through Entrepreneurship) ...................................................... 127
New Generation Ventures ........................................................................................................... 127
N.C. Capital Access Program ........................................................................................................ 128
N.C. Loan Participation Program .................................................................................................. 128
New Generation Leaders ............................................................................................................. 128
Rural Economic Development Institute (REDI) ............................................................................ 128
Child Day Care Loan Guarantee Fund .......................................................................................... 129
Rural Venture Fund...................................................................................................................... 129
NC State Small Business Credit Initiative ..................................................................................... 130
NC IDEA (Innovative Development for Economic Advancement)................................................................ 131
Self-Help – Community Development Financial Institution (CDFI) .............................................................. 131
Special Child Care Business Programs .......................................................................................... 132
Good Work, Inc. .......................................................................................................................................... 133
NC Economic Opportunities Fund / Dogwood Equity .................................................................................. 133
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Business Consortium Fund .......................................................................................................................... 134
Carolinas Minority Supplier Development Council ...................................................................................... 134
Natural Capital Investment Fund (NCIF) ..................................................................................................... 135
The Shade Fund ........................................................................................................................................... 135
Sequoyah Fund ............................................................................................................................................ 136
SlowMoney NC ............................................................................................................................................ 136
The Support Center...................................................................................................................................... 137
The Support Center/Fifth Third Bank Enterprise Loan Fund ........................................................ 137
Local Government Programs ........................................................................................................................... 138
Appalachian Regional Commission ............................................................................................................. 138
Carrboro Revolving Loan Fund .................................................................................................................... 138
Charlotte Communities Within A City (CWAC) Equity Loan Program ......................................................... 139
City of Charlotte – Business Equity Loan Program ...................................................................................... 139
City of Charlotte – Business Enterprise Loan Fund ..................................................................................... 140
City of Charlotte – Façade Improvement Grant Program ............................................................................ 140
City of Winston-Salem – Economic Development Revolving Loan Program ............................................... 141
City of Winston-Salem – Target Area Business Assistance Program ........................................................... 141
MAY Coalition ............................................................................................................................................. 142
Micro-Enterprise Loan Program of Winston-Salem/Forsyth County, Inc. (MELP) ........................................ 142
Raleigh Small Business Success Program .................................................................................................... 143
Optimum Capital Funding ........................................................................................................................... 143
ONLINE RESOURCES.................................................................................................................................... 143
Loan Matching Sites..................................................................................................................... 143
Peer-to-Peer Lending (P2P) ......................................................................................................... 144
Short Term Business Loans .......................................................................................................................... 145
CHAPTER 8: FINANCIAL ASSISTANCE SERVICES ......................................................................................... 147
NC Small Business and Technology Development Center (SBTDC) ................................................................. 147
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CHAPTER 1: INTRODUCTION
Small businesses continue to make important contributions to our national economy. Within the United States,
small businesses, defined by the U.S. Small Business Administration (SBA) as independent firms having fewer
than 500 employees, represent more than 99.7% of all employers, employ more than half of all private sector
employees, and account for 45% of the total U.S. private sector payroll. In addition, small businesses are
significant generators of new jobs, creating 60 to 80% of net new jobs annually. These figures from the SBA
substantiate that small businesses are vital engines for our nation’s economic growth.
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The North Carolina Small Business and Technology Development Center (SBTDC) publishes this guide in an
effort to support the growth of North Carolina’s economy and to educate and serve the small business
community. The SBTDC is a business and technology extension service of The University of North Carolina,
administered by NC State University and operated in partnership with the U.S. Small Business Administration.
Since 1984, we have provided management counseling and educational services to help make businesses
better.
This guide provides information about financial resources available to small businesses. Ideally, it would include
all sources of funding for small businesses, regardless of the location of the financing entity. Unfortunately, such
an undertaking is beyond the scope of this publication. Therefore, this guide concentrates on sources of capital
located in or actively serving North Carolina. Likewise, the Internet resources cited are illustrative and do not
represent a complete list of all useful materials to be found online.
Purpose of this Guide
This guide is intended to serve as a resource for individuals seeking start-up financing, businesses on the hunt
for expansion capital, and organizations that aid small businesses in obtaining financing. Each funding source is
briefly identified and accompanied by a list of contacts. It is the responsibility of the user to further explore
these resources and carefully review their submission criteria and guidelines. This guide also describes recent
developments that may affect the availability of funding or the eligibility of small businesses to access capital.
The financing sources contained in this guide are grouped into five major categories:
? Financial institutions
? Federal government sources
? State government sources
? Equity capital sources (includes angel and venture capital)
? Private, not-for-profit, and local programs
Each program has certain guidelines, some strictly limiting the availability of funds. It is important to
understand that none of these sources represents “free money.” In fact, some of the programs are quite costly.
The company or individual looking for start-up funding should have a well thought-out, detailed business plan,
including financial projections. Existing businesses will need a plan with both historical and projected financial
information. Only then can the needs of the applicant seeking capital be fully evaluated and met by the investor
or lender. The company’s stage of development, the background and reputation of the management team, the
1
For further information concerning the role of small businesses in our national economy, consult the U.S. SBA’s Advocacy Small
Business Statistics and Research, Frequently Asked Questions www.sba.gov/advo/stats/sbfaq.pdf
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nature of the product or services offered, and market potential will be key factors determining the firm’s ability
to raise capital.
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CHAPTER 2: OVERVIEW OF FINANCING RESOURCES
Getting Started
As a company moves through its life cycle, the sources it uses for capital change. In the early formation phase,
capital is generally raised through sources independent of the operations of the organization. Capital is
acquired chiefly through the personal resources of the owner or his immediate relations, and investor-related
debt. Any cash generated from operations is generally used for setup costs including purchases of inventory and
equipment. This initial phase calls for the use of techniques that maximize- or “stretch”- current funds, such as
seeking longer credit terms from suppliers, procuring advances from customers, subcontracting, and leasing
equipment, among other methods.
As the company grows, it begins to generate capital through its operations, and as it establishes a track record
of profitability, it will have more opportunities to obtain outside financing. Capital needed for expansion may be
available from external sources, including a greater emphasis on debt financing through commercial lenders or
equity financing through private investors and firms. As the company matures, operations generally provide
cash. Mature companies are in a better position to be able to afford the costs of further expansion through
combinations of debt and equity financing, such as private placements or initial public offerings (IPOs).
In all of these phases of business growth, companies must keep abreast of the latest tax credits and other
government incentives as well as grant opportunities. Though it is far more likely that a business will be able to
avoid a tax than obtain “free” grant money, an open mind must be kept toward all sources of potential
funding.
The organizational form of a business is another factor that determines the financing sources that may be
available. A sole proprietorship is often the form used by a small company -- operated by a single individual
(e.g. restaurant, trucking firm, gift shop) with few capital needs that cannot be met from the owner's resources
or conventional lenders. A start-up formed as a limited partnership (LP) may be attractive to investors who can
only be held personally liable up to the amount of their investment made. Neither partnerships nor sole
proprietorships, however, can raise equity financing through a private placement or an IPO. Corporations offer
greater flexibility for raising capital through a mix of debt and equity than do either sole proprietorships or
partnerships. Finally, the limited liability company (LLC) is a fairly new form of organization that combines the
characteristics of both corporations and partnerships.
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Start-Up (or “Seed”) Stage
External sources of financing refer to those funds not generated by business operations. During the start-up
phase, among the most important sources are personal assets accessible to the owner. The emphasis is on
external sources since the business is not yet generating positive cash flow. In the search for early-stage capital,
loan opportunities are usually limited by the need for collateral and personal guarantees, which serve as
protection to the commercial lender. It is unlikely for most start-up companies to obtain equity investments, in
part due to the high risk involved in this stage of investment. Factors such as a well-developed business plan, or
2
For further information on forms of business organization within North Carolina (including forms, filing fees, and useful how-to guides),
visit the N.C. Secretary of State’s Corporations webpage: www.secretary.state.nc.us/corporations.
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prior experience in the new business’s industry, improve one’s chances of acquiring start-up or early-stage
funding.
Personal Assets
Obtaining financing for a start-up enterprise is difficult because there is no track record on which the business
can be judged. Personal assets are thus the first source of capital that must be considered. A personal stake in
the enterprise shows a commitment to the business and provides lenders with a potential source of collateral to
secure a loan. Most banks require at least a 30 percent personal equity investment in a start-up business and 10
percent to 30 percent in a more established business. If an owner does not have access to sufficient personal
resources to get through the lean times of the start-up phase, it may be wise to re-evaluate the decision of
going into business at this time.
Sources of financing using personal assets (in the pre-seed stage, this is oftentimes referred to as
“bootstrapping” or “bootstrap” funding) include:
? Checking and savings accounts
o good source, if available
? Credit cards
o disadvantage: a credit line can come with a high interest rate
o advantage: only have to pay interest
? Stocks, bonds and other investments
o disadvantage: may face capital gains tax on the sale of investments that have appreciated
over the years
o advantage: no payment
? Retirement funds such as a 401K
o disadvantage: may face a penalty for early withdrawal
Family and Friends
Family and friends can provide direct investment funds, loans, or serve as guarantors on a bank loan if their
credit history and resources are strong. Unlike commercial sources, this group is personally acquainted with the
entrepreneur, and though they must still be objective in assessing the proposal, intangibles such as personal
character are often given more weight by family and friends than by more traditional sources. If an outright loan
is not possible, this group can still provide aid in procuring financing through credit enhancement. Credit
enhancements are assets of recognized value that can be borrowed to support a loan or other debt obligation.
This technique bolsters the asset base so that additional debt financing can be acquired. This can be
accomplished through the pledge of personal assets such as a CD, stocks, or bonds as collateral.
Home Equity Loans or Credit Lines
Home equity loans (sometimes referred to as a “second mortgage”, though it may in fact constitute a third or
even fourth lien on the collateral property) and equity lines of credit can be a source of funding for a small
business. The feasibility of this source will vary with the amount of equity that has been built up in the home. It
can usually be obtained through a bank, a mortgage company, a finance company specializing in secondary
funding, or a savings-and-loan (S&L) association. There are usually points or fees and closing costs (and
sometimes other factors, such as balloon payments) to be considered when assessing the costs of this mode of
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financing. The proceeds from the loan can either be used as a source of direct financing or as collateral to
secure a credit line.
Growth Phase
Internal Financing
Cash Management Tools
Effective cash management of a business is one of the best ways to raise capital, and it also helps avoid paying
interest on unnecessary external debt. Since short-term cash flow needs are vital to company operations,
available cash flow management techniques must be maximized. Small business banking services are
traditionally oriented around deposits and loans, with most services tied to checking accounts. However,
specialized services once used primarily by larger companies are now available to smaller businesses. The
following services can be used as part of an efficient cash management program:
a. Lockbox: An integral part of a profitable business is a fast, efficient accounts receivable process. A lockbox
is a post office box maintained by the bank to receive payments made to a business. The bank empties the
lockbox frequently and immediately deposits checks into your account. The advantage is that funds become
available much faster than if they are first sent to the place of business.
b. b. Controlled Disbursement Account: This tool enables the business to make timely payments while
maintaining the maximum earning power of funds. With a controlled disbursement account, the business
receives daily notification of the checks that will clear the account that day. Only the amount needed to
cover those checks is transferred to the checking account, ensuring that no idle cash remains in the account.
c. Sweep Account: A sweep account is an automatic system to move excess money into an interest-bearing
account every night. After all debits and credits are posted to the checking account at the end of the day,
funds in that account are automatically swept into a money market or savings account.
Accounts Receivable Management
Effective short-term cash flow management is vital to a company’s operations. Short-term financing needs are
decreased when cash flow is maximized through matching accounts receivable with accounts payable. This is
done by carefully negotiating and managing credit terms with customers and suppliers. Periods where payables
exceed receivables must be handled through short-term financing such as a line of credit. If the business itself
delays sending bills, the result is a longer period before payment is received. The use of that cash to cover
payables or for investment is lost over that period. The same is true when the collection cycle is lengthened as a
result of a failure of customers to pay according to the credit terms. Consider using discounts to encourage
timely customer payment.
Inventory Control
The less excess inventory carried, the greater the availability of funds for interest-bearing accounts or working
capital purposes. Excess inventory lowers a company’s profitability due to the money spent to produce or
purchase the idle goods that take up warehouse space and increase insurance costs. The goal of avoiding
excess inventory must be balanced with a company’s ability to consolidate inventory purchases to take
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advantage of volume pricing. Implementing an inventory control system can help reduce excess inventory and
its associated costs.
Electronic Commerce
Each of the preceding strategies for effective internal financing may be enhanced through the use of electronic
commerce. Electronic commerce, mostly in the form of Electronic Data Interchange (EDI), has been around since
the 1950s but until recently was primarily used by large companies doing business with the federal government
over expensive private networks. Technological advancement and the increased accessibility of both personal
computers and the Internet have made electronic commerce an increasingly popular and more affordable tool
for small businesses. For many individuals and small businesses, some aspects of electronic commerce are a
part of daily life—for example, direct deposit of payroll, credit card validations, and automatic bill paying.
Electronic commerce allows the computer-to-computer exchange of routine business information between a
company and its suppliers, its customers, banks, and other trading partners. One aspect of such an exchange
that offers an important financing opportunity to small businesses is the ability, through either EDI or the
Internet, to establish a partner-like relationship with their suppliers. Suppliers are then able to manage their
customers’ material logistics, including a customer’s on-hand inventory. The supplier’s goods may be moved on
consignment and/or the small business customer may not be expected to pay in full until the goods are used or,
in the case of manufacturing components, until the final product has been sold. In this way, the supplier
provides a portion of the working capital for the small business.
Procurement cards are another aspect of electronic commerce that offers significant cost-cutting potential to the
small business. A procurement (or purchasing) card is a specialized corporate credit card that can be customized
to limit dollar amounts and types of purchases that can be made by individual employees. Since banks replace
the vendor in the task of customer billing and collection, for a small business the ability to handle procurement
card transactions could mean both improved cash flow and significant cost savings.
Barter
Bartering is the trading of one item for another. Commercial trade exchanges serve as the mechanism for the
transfer. Through the use of computers, exchanges can match the needs and wants of its clients. Barter is a
good way to keep a business moving when cash is scarce. It is especially useful for a small business because it
allows the business to trade unused or excess inventory in exchange for goods and services for which the
business would otherwise have to pay. The resulting benefit to a business is that it cuts costs and eases cash
flow. Trades are normally made at full retail value with a 10 percent commission paid to the exchange. The
goods or services received are also considered as income for tax purposes. Among the larger exchanges
operating in North Carolina are International Barter Group (IBG) (843.824.1435) and ITEX BarterWorks
(www.itex.com )( 919.870.9226). For more information on bartering please visit the International Reciprocal
Trade Association at www.irta.com.
External Financing
As the business begins to grow, external financing sources should become more available, and debt or equity
may be used to satisfy financing needs. The mix of financing sources varies depending on the growth stage of
the business. During the start-up stage, entrepreneurs most often rely on “family and friends” and internal debt
financing, but as the business becomes more established, it develops a credit history and outside debt financing
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becomes more available. High-growth companies- those growing very quickly- are attractive to equity financers.
Equity financing providers may be companies, funds, or individuals, but they all seek to invest in private
companies in which they can anticipate a substantial rate of return for their investment. Debt financing is more
varied, both in the types of entities that provide such financing and in the types of financing available.
Short-term Financing
Short-term financing is used to address needs of one year or less in duration and is intended to take care of a
mismatch in cash flow generated from receivables and expended as payables. It is used to satisfy a business’s
working capital needs and to support investments in short-lived assets such as inventory and accounts
receivable. A working capital deficit indicates that a company has more short-term obligations (i.e., payables)
than short-term assets (i.e., cash, accounts receivable, inventory). The gap can be bridged through accessing
short-term financing (e.g., a revolving credit line).
The most common situation that challenges a company’s ability to repay its debt on a timely basis is using
short-term borrowing for long-term needs. This includes financing expenditures for fixed assets or intangibles
with short-term credit. Though most banks may be reluctant, refinancing short-term borrowings into long-term
debt typically resolves this problem. Balance sheet management is a key factor in determining the right type of
borrowing to utilize at the current stage of development.
a. Trade Credit: Accounts payable -- also called ‘trade credit’- is a form of money management that is
especially crucial for small firms. A business may finance itself by asking its vendors and suppliers to accept
a comfortable payment schedule instead of insisting on full payment at the time of delivery. A flexible
vendor can sometimes be a great solution to both the business and vendor. A business will seek to pay off
its debts over many months (without the penalty of interest charges) while collecting payments from its
customers in full and vendors will not be forced to take back its inventory and still ultimately get paid. This
system also keeps the maximum amount of cash under the business’s control, which can be very
advantages for new smaller businesses.
b. Term Loan: Commercial lenders are a key source of loans. A single loan obtained from a commercial lender
by a business firm is not much different from a loan obtained by an individual. Commercial term loans are
direct business loans with a maturity of five or fewer years. A major advantage of the term loan is that it
assures the borrower of the use of the funds for an extended period. The interest rate on term loans varies
with the level of prevailing rates, the size of the loan, and the quality of the borrower, and it may be fixed
for the life of the loan or it may vary. Repayment of principal and interest is made in a lump sum at
maturity or in installments throughout the life of the loan. Most term loans are installment loans repayable
on an amortized basis, which allows the loan to be repaid gradually over its life rather than have it due in
total at maturity.
c. Line of Credit: A line of credit is a formal or informal understanding between the bank and the borrower
concerning the maximum loan balance the bank will allow the borrower. This source is useful for short-
term financing of working capital, seasonal needs, and unplanned expenses. The amount of the credit line
is often linked to a percentage of a firm’s short-term assets. In most cases, the line of credit must be paid
off in full every 12 months.
d. Letter of Credit: A letter of credit is a financial instrument issued by a bank to provide a credit guarantee to
an outside supplier. The purpose is to guarantee that, if all terms and conditions of the letter of credit are
met, the seller will receive payment from the bank even if the buyer defaults on payment. The risk of the
18
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
buyer defaulting on payments is, therefore, transferred from the supplier to the bank. These are often hard
to obtain from a financial institute due to risk.
Long-term Financing
Long-term financing is general considered anything beyond twelve months and is generally used for investment
in long-lived assets. Long-term needs can be met by debt or equity financing or a combination of the two.
Debt Financing
Debt obligates the business to repay its lenders the debt principal along with a specified rate of interest. The
lender does not acquire an ownership interest in the organization, as would be common with equity financing.
When a business becomes insolvent, creditors or debt holders are entitled to payment before equity
shareholders. Interest payments on the debt by a corporation are tax deductible; dividend payments are not.
The lender looks closely at the borrower’s net worth, generally net worth is current assets minus liabilities,
because that amount is the main source of repayment.
Debt financing entails borrowing either at a fixed or a variable rate. A fixed rate offers certainty, but variable
rates are usually lower than fixed rates at the time the loan is extended and may decrease further if interest
rates fall. In general, if interest rates rise, so will the variable rate and higher monthly payments will result.
Some of the variable rate loans may be capped so as to guarantee not being raised above a certain rate.
Issues to consider regarding the use or pursuit of debt financing include:
? Businesses that cannot satisfy collateral requirements generally don’t qualify
? Risk of high leveraging
? Increasing risk during business cycle downturns since debt payments remain fixed
? Only the interest portion of the debt is tax deductible.
Equity Financing
A business owner may choose equity financing by selling part of the business to individuals, firms, or the public.
A corporation can issue shares of stock as a form of financing. Shareholders pay the corporation for their shares,
and each share represents an ownership interest in the corporation. Shareholders then acquire rights to
dividends and to a portion of the corporate assets on liquidation. There are two basic forms of equity financing:
common and preferred stock. Common stock represents the corporation's residual ownership interest. This is
what is left over after all other claims of creditors, debt holders, and preferred shareholders are satisfied.
Preferred stock has characteristics of both debt and common stock. Like debt, preferred stock earns a fixed
amount of income, in this case called dividends. Preferred stock shareholders have priority over common stock
shareholders as to dividends. Like common stock, it ranks behind the claims of debt holders and creditors in the
event of liquidation.
Issues to consider regarding the use of equity financing include:
? Owner must relinquish percentage of ownership for equity capital
? Equity investors fall behind debt holders in the event of liquidation
? Costs of preparing and placing private offerings can be relatively high
? Dividends may be subject to double taxation
19
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Debt Financing vs. Equity Financing
Consider the case of an entrepreneur who needs $150,000 to start a new corporation. For the purposes of the
illustration, assume this founder contributes $50,000 and the remaining $100,000 is financed with debt. At the
end of the first year, suppose the company has a net income of $100,000. Assume this $100,000 is used to pay
off the original debt. The founder is still the only equity holder, with $150,000 of equity on the balance sheet,
and the liability (debt) formerly held against the business has now been paid off. Since there are no additional
liabilities, all additional earnings can go towards operating expenses and/or assets for the company. Conversely,
if the business lost $100,000 after the first year, this loss would decrease the equity portion of the balance sheet
to negative $50,000 and the loan must still be paid. The company will likely have difficulty making these
payments and may be in danger of defaulting. As this illustrates, debt financing provides leverage to the
business owner and amplifies the impact of earnings as well as losses. In a second case, assume the company
obtains $150,000 of equity financing, with no debt financing, and has the same first-year net income of
$100,000. Unlike the first case, the equity position will increase to $250,000 and there is no debt to pay.
Conversely, if the company suffers a loss of $100,000 in the first year, this loss would decrease the equity
portion of the balance sheet to $50,000.
Debt-to-Equity Ratio
The analysis of the amount of debt financing used as compared to equity financing is referred to as the debt-to-
equity ratio. The ratio of total debt to equity provides an indication of how strong a company’s finances are by
comparing what it owes to what it owns. Potential lenders or investors use this ratio to evaluate risk: the higher
the equity in the firm’s capital structure- compared to the debt- the less risk the company appears to present to
a lender. For further information on debt, equity, and other financing basics visit the SBA’s Financing Your
Business webpage at www.sba.gov/financing/.
20
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
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21
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Obtaining a Loan
The most important aspect to realize in seeking a loan as a source of capital is that the lending institution
derives its return solely based on the borrower’s ability to repay the principal and interest. Since a lender’s
expected return on investment is limited to interest payments and service fees, it will be reluctant to accept as
high a degree of risk as may be acceptable to an investor who provides financing in exchange for a claim on
future earnings of the company.
The lender does not gain any additional return if the business does exceedingly well. One must also realize,
however, that these institutions principally derive revenue from making loans. A loan applicant, therefore, must
take the time to gain an understanding of what the lending institution looks for in a loan candidate and why
the business opportunity is a solid proposition for the bank.
Before approaching a financial institution, the applicant needs to have the following documents:
? A business plan
? Federal tax returns for the previous three years
? Personal and business financial statements
? Cash flow statements.
A business plan is the first indication of how the business is going to be managed. A business plan is often one
of the most important documents and can be seen as a sales tool directed at those people who are considering
backing the entrepreneur. If it is thorough and well prepared, this is a predictor that the business will be
managed the same way. The business plan should be sufficiently complete to prove the ability of management
to understand the critical factors of the business such as product, market demand, competition, cost structure,
pricing, and management.
Information needed to support a loan request includes:
? Size of the loan requested or needed
? Capital already on hand
? Experience of management
? What the loan proceeds will be used for
? How the loan will improve the business
? Evidence of ability to repay the loan.
Factors an applicant must consider in seeking a loan include types of loans offered, rates and fees, collateral
requirements, personal guarantee requirements, lending limits, and loan processing time. While the institution
will have a policy regarding these elements, its flexibility will depend on the strength of the applicant. From the
institution’s point of view, personal credit and payment history are some of the factors indicating the degree of
risk involved in making the loan. The more accounts and services an individual has with the institution --
personal and business checking account, savings account, credit card, IRA -- the more valuable they are to the
bank. This gives the individual more leverage in negotiating terms and conditions of the loan.
It is important for a small firm seeking loan capital to develop a relationship with the lender early in the
process. Even before the loan is needed, it is important to take steps to solidify the foundation for a good
22
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
working relationship. Once the loan is made, it is important to remain in close contact with the bank. If
problems arise, the bank will want to help the company in order to avoid having a bad loan in its portfolio.
Grants
Generally speaking, grants given to business start-ups are very rare. An exception may be for a high technology
business or for businesses producing products that can be used by certain agencies or departments involved in
our nation's defense. Also, non-profit businesses are sometimes eligible for grants. For the most part, these
grants are very specialized. In addition, many Government grants are not available year-round. That is, you
can't apply for most of them at any time you please -- in general, you can apply for them only when they are
announced by a Government agency.
Grant information can be found at your local library in the business section or by visiting the following websites:
1. Grants.gov: the electronic storefront for Federal grants -- www.grants.gov
2. SBA Note on Grants – www.sba.gov/category/navigation-structure/loans-grants/grants
23
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
CHAPTER 3: FINANCIAL INSTITUTIONS
Commercial Banks
Commercial banks are usually one of the least expensive providers of loan capital and among the largest
sources of credit to small businesses. This source of financing will be most helpful for a business that has
demonstrated it can operate profitably. Banks are most interested in financing firms that can show an ability to
repay the loan. This usually means a company must have a strong positive cash flow or assets as collateral that
can be easily liquidated. The evaluation will consist of a detailed analysis of the company’s income statement,
balance sheet, and cash flow statement. Factors such as the content of the business plan and experience of the
management are also considered. If a business has no consistent operating history or cannot demonstrate that
funds will be available to repay the loan, it may be difficult to procure financing using this method.
Payment terms from commercial banks are usually up to five years until maturity but can then be renegotiated
to ten or fifteen years. Most debt is secured, although some unsecured lines may be available. Personal
guarantees are almost always required resulting in exposure of the borrower’s personal assets in the event of a
business failure. Even if the business is formed as a corporation, the limited liability feature is superseded by a
personal guarantee.
The interest rate on a loan is typically expressed as a percentage in excess of the prime rate. Prime is the rate
the nation’s largest banks charge their best customers. The prime rate itself will vary according to economic
conditions; it is primarily dependent on the rate the banks themselves are charged by the Federal Reserve to
borrow money. The percentage over prime that a customer is charged is based on the banker’s perception of
the risk taken by granting the loan.
Prime rates can be found at wsj.com/mdc/public/page/2_3020-moneyrate.html.
Lending institutions have different policies towards risk. Some are inclined to follow relatively conservative
lending practices; others engage in more creative banking practices. Banks borrow money elsewhere at a lower
rate and lend it out at a higher rate; therefore, the commercial bank’s primary concern is a borrower’s ability to
cover principal and interest repayments. Although bankers are interested in all financial aspects of a borrowing
firm, hard assets provide their primary insurance if the business fails.
According to the SBA Office of Advocacy’s 2013 report on small business lending activities, the total number of
small business loans increased from 21.3 million in June 2011 to 23.5 million In June 2012. The full report is
available at www.sba.gov/advocacy/7540/719311.
The North Carolina Banking Commission currently regulates 108 state-chartered, commercial banks and 24
Trust Companies (or Limited Purpose Banks). Since 1994, the SBA Office of Advocacy has ranked the small
business lending behavior of every commercial bank in each state to help depositors and borrowers identify the
small-business-friendly banks in their state. Four factors are used to rank the small business lending activities of
each bank:
? Ratio of small business loans to total assets
? Ratio of small business loans to total business loans
? Dollar value of small business loans
24
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
? Number of small business loans.
The top North Carolina banks, ranked according to the above criteria and by total small business loans ($120 million
HVP I – Pre-seed fund
HVP III – early-stage
fund
Three Funds:
HVP I: $3 Million
HVP II: $35 Million
HVP III: $83 Million
Life Sciences, Biopharmaceuticals,
Medical Devices, Diagnostics, and related
opportunities in human medicine.
H.I.G. Ventures 1993 >$8.5 billion Seed & Early Stage $5 million - $30 million
Communications, infrastructure, e-
commerce, and Internet software &
services industries.
Idea Fund Partners N/A N/A Seed & Early Stage $100,000 - $750,000
Software, IT Infrastructure, Materials
Technologies, Medical Devices &
Diagnostics
Intel Capital- c/o Intel
Corp.
Early 1990's >$2 billion
Early Stage through
Later Stages
N/A
Internet technologies, wireless &
broadband, hardware & software
applications.
Investments are made to support Intel's
"mission to be the preeminent building
block supplier to the worldwide Internet
economy. Investments support Intel
product initiatives, Intel's new business
thrusts, emerging trends and worldwide
Internet deployment."
Intersouth Partners 1985 $780 million
Seed &
Early Stage
$500,000 to $6 million
Information Technology (networking,
electronics, software); Life Sciences
(biotechnology, genomics, medical
devices, medical services companies).
JAFCO Ventures N/A >$750 million All Stages N/A
Primarily IT sector= Communications;
Internet & Infrastructure; Software;
Systems & Peripherals.
"We have more than 70 Asian
corporate contacts and over 60 Asian
limited partners, and have helped more
than 40 of our portfolio companies
successfully enter the Asian market."
102
CAP I T AL OP P ORT UNI T I ES F OR SMAL L BUS I NES S ES
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
KBL Healthcare
Ventures
1991 N/A
Start-up, Early Stage
& Emerging Growth;
will consider Later
Stage investments
N/A
Life Sciences (biopharmaceuticals, drug
discovery platforms & advanced
materials); Medical devices ("Within the
medical device area, we seek companies
addressing large, unmet medical needs
with demonstrated clinical benefit");
Healthcare services; Medical information
technology.
Kleiner Perkins
Caufield & Byers
1972 $1.5 billion Early Stage N/A
Broadband Equipment & Services;
Consumer Devices & Services; Enterprise
Software & Service; Financial Services;
Internet Infrastructure Software &
Services; Medical Devices/Healthcare
Services/Biotech.
Kodiak Venture
Partners
1999 $681 million Seed & Early Stage $100,000 to $3 million
Communications/IT, Semiconductors,
Software.
Lilly BioVentures N/A N/A Early Stage N/A Biotechnology/Pharmaceuticals.
Prefers to receive business plans via e-
mail.
Lovett Miller & Co.,
Inc.
N/A $175 million
Early Stage, Growth
Capital & Growth
buyouts
typically invests $2 million to $10
million per company, but will
consider smaller & larger
investments
Technology products & services,
Healthcare, Retailing, and other.
MCNC-RDI Seed Fund-
c/o MCNC Ventures,
LLC
2003 N/A
Seed/Start-up & Early
Stage
$50,000 to $500,000
Optical Network Technologies; Network
Security & Encryption; Sensors &
Actuators; Microelectronics &
Microfabrication; Wireless
Infrastructures; Related Biomedical
Applications.
Will consider pre-business plan & pre-
management team opportunities.
MCNC Enterprise
Fund- c/o MCNC
Ventures, LLC
2003 N/A
Early Stage (Will
invest only alongside
select, established VC
firms & funds)
$500,000 to $2 million
Optical Network Technologies; Network
Security & Encryption; Sensors &
Actuators; Microelectronics &
Microfabrication; Wireless
Infrastructures; Related Biomedical
Applications.
PROFILES: VENTURE CAPITAL FUNDS ACTIVE IN NORTH CAROLINA
(as of August 2011)
103
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
MPM Capital-
BioVentures Funds
N/A >$2.1 billion All Stages
historically $7 million to $50
million per company
Life Sciences- primarily in biotechnology
(80%), but also in medical devices (20%)
& biopharmaceuticals.
Advertises itself to be the world's
largest dedicated investor in Life
Sciences.
Massey Burch Capital
Corp.
1994 >$250 million
Early Stage/Start-up
(80%), Later Stage
(20%)
$500,000 to $2 million
Information Technology,
Communications/Internet Solutions, and
Healthcare Services.
Will not consider real estate, oil & gas,
environmental, entertainment, retail
chains or pharmaceuticals.
Mediphase Venture
Partners
N/A N/A Early Stage N/A
Biopharmaceutical technology & Life
Sciences information; occasionally other
areas of life sciences/healthcare.
Meritus Ventures, L.P. 2002 $36 million Expansion stage $250,000 - $2,500,000
The Fund has a broad industry focus that
includes, but is not limited to,
manufacturing, technology, and
software.
The Fund will invest in rural areas in the
Appalachian regions of Ohio, West
Virginia, Virginia, North Carolina, South
Carolina, Georgia, Alabama,
Mississippi, and the entire states of
Arkansas, Kentucky and Tennessee.
Mitsui & Co. Venture
Partners, Inc. (MCVP)
1984 N/A Early Stage
$1 million to $10 million per
company
Information Technology (software,
communications, semiconductors,
electronics, information services, others);
Healthcare (medical devices
(therapeutics/diagnostics),
biopharmaceuticals, drug discovery, drug
discovery tools, others).
"We have provided significant value to
our portfolio companies by leveraging
our experience and business
relationships to develop business
opportunities for them in Japan, China,
and the rest of Asia."
Morgan Stanley
Venture Partners
1985 >$1.1 billion
Later Stage only (no
start-ups)
$5 million to $15 million
Primarily Information Technology
(enterprise software, Internet
infrastructure, communications software
& products, and wireless) and Healthcare
(medical products/devices,
biopharmaceuticals & healthcare IT).
104
CAP I T AL OP P ORT UNI T I ES F OR SMAL L BUS I NES S ES
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Morgenthaler Ventures 1968 $3 billion
All Stages
IT: Expects to invest $5 to $15
million total in each company
over several rounds.
Life Sciences: Expects to invest
between $12 and $20 million
total in a biotech company over
several rounds.
Enterprise IT (enterprise software,
systems & services); Life Sciences
(therapeutic biotech companies, specialty
pharmaceuticals, select biotech tools,
therapeutic medical devices);
Semiconductor & components (optical
networking, wireless communications,
communications semiconductors);
Broadband communications (telecomm
equipment & services).
NC Bioscience
Investment Fund
(NCBIF)- c/o Eno River
Capital, LLC
1998 $26 million Seed & Early Stage $500,000 to $4 million
Life Sciences and Information
Technology.
NCBIF focuses on commercializing
technology developed at North
Carolina's universities and research
institutions.
NC Innovative
Development for
Economic
Advancement (NC
IDEA)
2005 $1.7 Million Early Stage $10,000-$50,000
Information Technology, Medical
Diagnostics, Medical Devices, Material
Sciences, and Green Technologies.
New Enterprise
Associates (NEA)
1978 $11 billion
All Stages, but
primarily interested in
Start-up/Early Stage
$200,000 to $20 million
Information Technology
(communications, software & services,
electronics, semiconductors) and
Healthcare (medical devices, healthcare
services, healthcare information systems
& services, biopharmaceuticals).
New Atlantic Ventures 1999 $117 million Seed & Early Stage $500,000 to $5 million
Exclusively in Information Technology
(communications equipment & software,
enterprise software & services, internet
infrastructure services).
PROFILES: VENTURE CAPITAL FUNDS ACTIVE IN NORTH CAROLINA
(as of August 2011)
105
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Newlight Associates 1997 >$100 million All Stages $1 million to $4 million
Information Technology (esp. software,
specialty semiconductors, Internet
infrastructure, communications, business-
to-business e-commerce).
NextPoint Partners, LP 1990 N/A Seed & Early Stage $250,000 to $4 million
Technology companies, mainly in the
software sector (enterprise software &
related services, telecommunications,
networking, Internet infrastructure,
semiconductors).
Invests primarily in the Mid-Atlantic
region; has recently invested in NC.
Noro-Moseley Partners 1983 $580 million
Seed/Start-up, Early
Stage & Growth
Stage
$3 million to $12 million
Technology (software, web applications,
communications infrastructure
(components & systems or other
hardware), other); Healthcare (services,
life sciences, information technology,
devices); Business Services (outsourcing
(telecom services, human resources, web
services), transaction processing,
financial services).
Different investment criteria and
investment parameters based upon
classification of the company by stage.
To view firm's classification scheme
visit: www.noro-moseley.com/stage.asp
Origin Partners, LP N/A N/A
Early Stage
(primarily), but may
invest in Later Stage
$2 million or less (looks to
invests $3 million to $5 million
total per company and
participate in all future financing
rounds prior to liquidity)
Information Technology,
Communications, Medical Technology
Invests primarily in Northeast U.S. and
Texas, but will invest elsewhere; has
recently invested in NC.
Oxford Bioscience
Partners
1992 $1 Billion
Seed (selective) &
Early Stage
$1 million to $10 million Life Sciences: Bioscience and Healthcare.
Pappas Ventures 1994 >$350 Million Seed to Early Stage $500,000- $5 million
Life Sciences – Biotechnology,
Biopharmaceuticals, Drug Delivery,
Medical Devices & Related Ventures
The largest share of Pappas’ capital is
invested in companies whose lead
products are at the Phase 1 or Phase 2
stage of development.
Piper Jaffray Ventures N/A $5.2 Billion All Stages $3 million to $10 million
Exclusively in Healthcare (medical
technology, biotechnology & healthcare
services).
Firm is an independent subsidiary of
U.S. Bancorp Piper Jaffray.
106
CAP I T AL OP P ORT UNI T I ES F OR SMAL L BUS I NES S ES
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Polaris Venture
Partners
1996 >$3 billion Seed & Early Stage N/A
Information Technology (64%) (Internet
& broadband infrastructure, enterprise
software, e-commerce products &
services, network hardware & network
software); Life Sciences/Medical
Technology (36%) (medical devices,
pharmaceuticals, genomics, proteomics,
drug delivery).
Primus Venture
Partners, Inc.
1983 $625 million
All Stages, but
primarily interested in
Growth Stage
$15 million to $40 million overall
investment per company
Software & Services, Media &
Communications, and Healthcare; will
consider others.
Quaker BioVentures,
Inc.
2003 >$700 million All Stages
Initial: $2.5 million to $12 million
Overall investments: $5 to $25
million
Exclusively in Life Sciences
(biopharmaceuticals, medical devices,
human diagnostics, health information
technology, healthcare services).
River Cities Capital
Funds
1994 $400 million
Early to Mid-Stage,
some Later Stage;
generally does not
invest at Seed Stage
? Seed Stage: $15
million
Business Services; Healthcare (healthcare IT,
healthcare services, approved medical
devices); Telecom & Communications (radio
stations, last mile broadband, telecom services
& publishing); Information Technology
Products (software applications, middleware &
tools); High Tech Manufacturing & Logistics
(technology-enabled fabrication & distribution
of physical goods). Does not generally invest
in: biotech, consumer-driven businesses (e.g.
retail, restaurants, B2C or C2C internet),
dollars-for-hours businesses (e.g. consulting,
systems integration), interest rate spread
businesses (e.g. banking, insurance), publicly
traded or very large private businesses, real
estate or franchisees.
To view their Business Plan Submission
Guidelines visit:
www.rccf.com/process2.htm
PROFILES: VENTURE CAPITAL FUNDS ACTIVE IN NORTH CAROLINA
(as of August 2011)
107
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
SJF Ventures 1999 N/A
Early Stage -
Expansion Stage
$1 - $10 Million
Cleantech, Business, and Web-enhanced
services & premium consumer products
sectors.
"The mission of SJF is to create quality
employment for low wealth citizens and
communities by financing and assisting
companies that generate social,
environmental, and financial gains."
SJF is certified as a community
development financial institution
(CDFI).
SSM Ventures N/A >$156 million
Primarily in Expansion
& Later Stages; only
opportunistically in
Early Stages
$5 million to $20 million
Non-technology & Technology-based
businesses (healthcare, business
outsourcing), and Consumer Service
companies.
Sapient Capital
Management, LLC
N/A $26 million
Seed, Start-up & Early
Stage
$2 million to $3 million
Exclusively in Healthcare (esp. medical
devices).
Sapient prefers investments west of the
Mississippi River, but will consider other
geographic areas; has recently invested
in NC.
SV Life Sciences, Inc. 1993 $2 billion All Stages $5 million to $20 million
Exclusively in Life Sciences
(biotechnology, pharmaceuticals, medical
devices & instruments, healthcare IT &
services).
iSherpa Capital, LLC 2003 N/A Seed & Early Stage N/A
Exclusively in Wireless & Supporting
Technologies.
Firm stays actively involved. "We place
our firm's staff on site at our portfolio
companies to provide operational
expertise."
Siemens Venture
Capital, Inc. (SVC)
N/A >$500 million
Early & Expansion
Stage
approximately $500,000 to $5
million
Information & Communications
(including wireless); Medical Solutions
(including diagnostics); Industrial
Automation & Power; Automotive &
Networked Transportation Systems;
Energy Management.
SVC identifies and funds investments in
emerging and innovative technologies
that will enhance the core business
scope of Siemens AG" (its German-
based parent).
SilkRoad Equity LLC 2003 N/A All stages $1 to $20 million
Technology, Media and Entertainment,
Life Sciences, Telecommunications, Retail
(food and non-food),Manufacturing,
Business Services
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CAP I T AL OP P ORT UNI T I ES F OR SMAL L BUS I NES S ES
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Sippl Investments LLC 1995 $30 million
Early Stage &
Emerging
$200,000 to $750,000
Exclusively in Software (internet &
enterprise software).
Invests primarily in companies located
in Silicon Valley; has recently invested
in NC.
Southern Capitol
Ventures
2000 N/A Seed & Early Stage $500,000 - $1.5 Million
Exclusively in Information Technology
and Life Sciences.
Spencer Trask
Ventures, Inc.
N/A N/A Early Stage N/A Varies
Sterling Partners 1983 $4 billion
Early Stage &
Expansion Stage
$5 million to $150+ million
Healthcare, Software, Industrial
Technology, and Business Services. To
view a more detailed list visit:
www.sterlingcap.com/venture/focus/
Tall Oaks Capital 2000 $12.5 million Seed & Early Stage $50,000 to $1.5 million
Primarily in Information Technology and
Life Sciences.
A Village Ventures Affiliate Fund.
Texas Pacific Group
(TPG) Capital
1992 $48 billion
Early Stage &
Acceleration Round
$10 million to $20 million total
per company/venture
Information Technology and
Biotechnology, with an emerging practice
in Consumer-based opportunities.
Three Arch Partners 1993 >$600 million
Seed & Early Stage
(Three Arch Parters III
Fund ($200 million));
Development Stage
(Three Arch Capital
Fund ($300 million)).
$100,000 to $10 million
Exclusively in Healthcare/Life Sciences
(biotechnology, biopharmaceuticals,
healthcare information technology,
healthcare services & medical devices).
Total Technology
Ventures, LLC (TTV)
2000 $1 billion Mid- to Late-Stage $100,000 to $15 million
Financial Services industry, and IT driven
businesses with products that serve the
financial services industry (financial
services software & infrastructure
solutions, payment technology/E-
commerce enablers,
authentication/security, cash & asset
management, investment technology).
The Treyls Funds 2001 N/A
Early to Mid-Stage;
generally does not
consider Seed Stage
investments
$500,000 to $3 million
Generally in Information Technologies,
Communications Technologies,
Biotechnology, and Life Sciences, but
may consider others matching its
investment criteria.
PROFILES: VENTURE CAPITAL FUNDS ACTIVE IN NORTH CAROLINA
(as of August 2011)
109
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Updata Venture
Partners
1988 >$500 million All Stages $2 million to $5 million
Exclusively in Information Technology
(enterprise software, information
services, transaction processing, financial
technologies, healthcare IT, business
services & outsourcing, IT services).
Primarily a private equity firm, but open
to earlier stage opportunities.
VantagePoint Venture
Partners
1996
>$4.5 billion
All Stages (seed stage
through mezzanine
rounds)
N/A
Communications & Systems,
Semiconductor & Components, Software
& services, related growth industries.
To view their Business Plan Guidelines
visit: www.vpvp.com/submit/index.asp
Versant Ventures-
Versant Ventures II
Fund
1999 $1.6 billion Early Stage N/A
Medical Devices, Healthcare Services,
Healthcare Information Technology, and
Life Sciences (biopharmaceuticals,
biotechnology platforms).
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Finding Venture Capital Statistics & Trends and Monitoring Current (NC) VC Activity online:
1. PricewaterhouseCoopers’, Thomson Reuters, and the National Venture Capital Association’s
MoneyTree Report- www.pwcmoneytree.com
- Data by State, Region, MSA & Congressional Districts:https://www.pwcmoneytree.com/MTPublic/ns/index.jsp
2. National Venture Capital Association (NVCA)- www.nvca.org
3. Triangle Business Journal- triangle.bizjournals.com/triangle/ - run a Search for keyword
“venture capital”.
4. The Business Journal of the Greater Triad Area- www.bizjournals.com/triad/ - run a Search for
keyword “venture capital”.
5. Charlotte Business Journal- www.bizjournals.com/charlotte/ - run a Search for keyword
“venture capital”.
Commercial Bank Investing Arms
BB&T Capital Partners, LLC
200 West Second St.
Winston-Salem, NC 27101
336.733.2420
www.bbandt.com/capitalpartners
additional office in Charlotte
Bank of America Capital Investors
100 North Tryon St., 25
th
Floor
Charlotte, NC 28255
704.386.4710
[email protected]
www.bacapitalinvestors.com
CIBC World Markets
One Alliance Center
3500 Lennox Rd.
Suite 730
Atlanta, GA 30339
770.319.4999
www.cibcwm.com/wm/
Arcapita Inc.
(a subsidiary of Arcapita Bank B.S.C. of
Bahrain)
75 Fourteenth St., 24
th
Floor
Atlanta, GA 30309
404.920.9000
www.arcapita.com
Venture Capital Solutions, LP
c/o VCS Management, LLC
(subsidiary of Southern Community Bank &
Trust)
112 Cambridge Plaza Dr.
Winston-Salem, NC 27104
336.768.9343
[email protected]
www.vcslp.com
Wachovia Capital Partners
301 South College St., 12
th
Floor
NC0732
Charlotte, NC 28288-0732
704.383.0000
www.wachoviacapitalpartners.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Private Equity Providers (Private Equity Firms)
Note: Firms marked with a * may also be found in the
venture capital section of the report
Adams Street Partners, LLC
One North Wacker Dr., Suite 2200
Chicago, IL 60606-2823
312.553.7890
[email protected]
www.adamsstreetpartners.com
Apax Partners, L.P.
601 Lexington Ave., 53
rd
. Floor
New York, NY 10022
212.753.6300
[email protected]
www.apax.com
Argosy Partners
950 West Valley Rd., Suite 2900
Wayne, PA 19087
610.971.9685
www.argosycapital.com
Ballast Point Venture Partners
880 Carillon Parkway
St. Petersburg, FL 33716
727.567.1500
[email protected]
www.ballastpointventures.com
Bison Capital Asset Management, LLC
401 North Tryon St., 10th Floor
Charlotte, NC 28202
704.333.4899
James K. Hunt, Managing Partner
[email protected]
www.bisoncapital.com
Blue Point Capital Partners
201 South Tryon St., Suite 850
Charlotte, NC 28202
704.347.1111
[email protected]
www.bluepointcapital.com
Boston Millennia Partners
30 Rowes Wharf, Suite 500
Boston, MA 02110
617.428.5150
[email protected]
www.millenniapartners.com
CapitalSouth Partners, LLC
4201 Congress Street, Suite 360
Charlotte, NC 28209
704.376.5502
[email protected]
www.capitalsouthpartners.com
additional office in Raleigh
Carousel Capital
201 North Tryon St., Suite 2450
Charlotte, NC 28202
704.372.2040
www.carouselcapital.com
Cherokee Investment Partners
111 E. Hargett St. #300
Raleigh, NC 27601
919.743.2500
www.cherokeefund.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Chapter IV Investors
301 South Tryon Street, Suite 1850
Two Wachovia Building
Charlotte, North Carolina 28202
704.644.4070
www.chapterivinvestors.com
Core Capital Partners
1401 I Street NW, Suite 1000
Washington, DC 20005
202.589.0090
[email protected]
www.core-capital.com
Digital Power Capital, LLC
411 West Putnam Ave., Suite 125
Greenwich, CT 06830
203.862.7045
www.digitalpower.com
Easton Hunt Capital Partners, LP*
767 Third Ave.
New York, NY 10017
212.702.0950
[email protected]
www.eastoncapital.com
Falfurrias Capital Partners
100 North Tryon Street, Suite 5120
Charlotte, NC 28202
704.371.3220
www.falfurriascapital.com/
Fenway Partners, Inc.
152 West 57th St., 59
th
Floor
New York, NY 10019
212.698.9400
[email protected]
www.fenwaypartners.com
Franklin Street Partners
1450 Raleigh Rd., Suite 300
Chapel Hill, NC 27517
919.489.2600 or 877.489.2600
www.franklin-street.com/
Frontier Capital, LLC
1111 Metropolitan Ave.
Charlotte, NC 28204
704.414.2880
[email protected]
www.frontiercapital.com/
General Catalyst Partners
20 University Rd., Suite 400
Cambridge, MA 02138
617.234.7000
[email protected]
www.generalcatalyst.com
Grotech Capital Group
8000 Towers Crescent Dr. Suite 850
Vienna, VA 22182
703.637.9555
www.grotech.com
The Halifax Group
3605 Glenwood Ave., Suite 490
Raleigh, NC 27612
919.786.4420
www.thehalifaxgroup.com
Harbert Management Corporation*
HMC-Virginia, Inc.
1210 East Cary St., Suite 400
Richmond, VA 23219
804.782.3800
www.harbert.net
H.I.G. Capital*
Two Buckhead Plaza
3050 Peachtree Rd. NW, Suite 360
Atlanta, GA 30305
404.504.9333
[email protected]
www.higcapital.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Lovett Miller & Co., Inc*
W. Radford Lovett II
One Independent Dr., Suite 1600
Jacksonville, FL 32202
904.634.0077
[email protected]
W. Scott Miller
100 North Tampa St., Suite 2675
Tampa, FL 33602
813.222.1477
[email protected]
www.lovettmiller.com
MB Venture Partners, LLC
17 West Pontotoc, Suite 200
Memphis, TN 38103
901.322.0330
[email protected]
www.mbventures.com
M/C Venture Partners
75 State St., Suite 2500
Boston, MA 02109
617.345.7200
[email protected]
www.mcventurepartners.com
Morgenthaler Partners
Terminal Tower
50 Public Square, Ste 2700
Cleveland, OH44113
216.416.7500
www.morgenthaler.com/private-equity/
QuestMark Partners, LP
One South St., Suite 800
Baltimore, MD 21202
410.895.5800
[email protected]
www.questmarkpartners.com
Renaissance Ventures, LLC
33 South 13th St., 3rd Floor
Richmond, VA 23219
POB 2157
Richmond, VA 23218
804.643.5500
[email protected]
www.renventures.com
SSM Ventures*
Crescent Center
6075 Poplar Ave., Suite 335
Memphis, TN 38119
901.767.1131
www.ssmventures.com
Sapient Capital Management, LLC*
4020 Lake Creek Dr. (Federal Express)
POB 1590 (Postal Service)
Wilson, WY 83014
307.733.3806
[email protected]
www.sapientcapital.com
Seaport Capital
40 Fulton Street, 27
th
Floor
New York, NY 10038
212.847.8900
[email protected]
www.seaportcapital.com
Sterling Venture Partners
650 S. Exeter Street, Suite 1000
Baltimore, MD 21202
443.703.1700
www.sterlingpartners.com
Triangle Capital Corp.
3700 Glenwood Ave., Suite 530
Raleigh, NC 27612
919.719.4770
www.tcap.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Updata Partners
Two Freedom Square
11955 Freedom Dr., Suite 7000
Reston, VA 20190
703.736.0020
[email protected]
www.updatapartners.com
Warburg Pincus LLC
450 Lexington Ave.
New York, NY 10017
212.878.0600
[email protected]
www.warburgpincus.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Securities Offerings
Regulation D (Rule 504)
The issuance of equity securities usually must be registered with the Securities and Exchange
Commission (SEC). Registration documents include detailed disclosure, historical financial statements,
and third-party audits. This can be a costly process. A private placement, however, is exempt from
federal registration. A private placement under Regulation D of the security code can minimize costs
and delays while giving a business access to equity capital.
Rule 504 is the most commonly used Regulation D exemption. Under Rule 504, the SEC exempts
companies that are raising up to $1 million from most of the SEC registration and reporting rules that
govern larger stock sales. The only restriction is that the company must not raise more than $1 million
over a twelve-month period before or after the offering. Somewhat more restrictive requirements for
Regulation D exemptions are outlined under Rules 505 and 506 for larger offerings that include non-
accredited investors. Rule 504 itself has no prescribed disclosure requirements, no limit on the number
of purchasers, and no investor sophistication standards. If the company adheres to the above limits, it
can advertise and sell to any number of people. Some states require additional filings and impose
further restrictions. Regulations must be looked into on a state-by-state basis where it is anticipated
that the securities will be sold. It is important to remember that the exemptions from registration
provided by Regulation D do not include exemptions from the anti-fraud or civil liability provisions of
any of the federal or state securities laws.
Although the 504 offering seems tailor-made for entrepreneurs, even simplified stock offerings carry a
cost. These offerings are designed to be conducted without the use of an investment banker, but there
still are costs associated with marketing the stock offering. The company must either sell the security
offering itself or engage the assistance of a licensed brokerage firm. Handling the administration for
the first time may lead to unanticipated delays in putting out the issue. Additionally, this method is not
for all small companies considering stock offerings. If the company is growing quickly, it may be able to
raise more capital by waiting for a traditional IPO.
Small Corporate Offering Registration (SCOR)
The Small Corporate Offering Registration (SCOR) was adopted by the North American Securities
Administrators Association to standardize state filing requirements in conjunction with Regulation D,
Section 504, security offerings. SCOR standardizes the state filing process with Form U-7, the general
registration form for corporations registering under state securities laws. Up to $1 million may be
raised at a minimum offering price of one dollar ($1) per share. Prior to using Form U-7, a company
should contact the staff of the securities administrator of each state in which the offering is to be filed
to review applicable substantive fairness standards. Please note that not all states have adopted the
use of Form U-7. The U-7 and issuer’s manual may be located through the North American Securities
Administrators Association’s website: www.nasaa.org.
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Assistance with Filings:
NC Department of the Secretary of State
Securities Division
POB 29622
Raleigh, NC 27626-0622
919.733.3924 or 800.688.4507
www.secretary.state.nc.us/sec
Initial Public Offering (IPO)
An initial public offering (IPO) refers to a company’s initial sale of securities to the general public. The
key considerations for deciding whether to “go public” include company size, profitability, current
stock market conditions, nature of industry, market share, experience of management, and future
outlook for the business and industry. Generally, a company needs revenues of around $10 million and
net income of $1 million to be considered an IPO candidate.
An IPO offers the advantage of raising capital for growth while increasing the liquidity of the
corporation. The offering may also improve the ability to borrow in the future since lenders favorably
view a lower debt-to-equity ratio. The disadvantages of public offerings include the possible loss of
control, required disclosure of a wide array of business and personal information, and substantial costs.
Key considerations include company size, profitability, quality of management, market share, industry
position and trends, stock market conditions and other factors. Issues such as feasibility, control,
disclosure and costs must be accurately assessed prior to committing to the IPO process. As a rule,
costs will be at least 10% of the proceeds – higher for smaller or less attractive issues. It is also
important to remember that quarterly performance is strictly monitored and can significantly affect
stock price.
Discussing your company’s objectives with a professional will assist you in making the appropriate
decisions. One such professional is the investment banking firm that underwrites the deal. The
company you choose should have a history of successfully assisting other companies through the IPO
process.
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Investment Intermediaries – Investment Banking
NC Firms that handle IPOs & related transactions
The Capital Corporation
84 Villa Rd.
Greenville, SC 29615
Toll Free 800.259.0119 / 864.672.8400
www.thecapitalcorp.com
Cary Street Partners
Wachovia Tower
300 North Greene St., Suite 860
Greensboro, NC 27401
336.275.8080
www.carystreetpartners.com
Deutsche Banc
100 N. Main St., Suite 2400
Winston-Salem, NC 27101
336.724.6921 or 800.553.6015
www.db.com
Morgan Keegan & Company
3700 Glenwood Ave., Suite 250
Raleigh, NC 27612
Telephone: 919.784.8300
www.morgankeegan.com
also locations in Charlotte, Durham, Greensboro, and
Wilmington
Scott & Stringfellow, Inc.
3605 Glenwood Ave., Suite 400
Raleigh, NC 27612
800.763.1893
[email protected]
www.scottstringfellow.com
also 10 other locations in NC
SunTrust Robinson Humphrey, Inc.
3333 Peachtree Rd., NE
Atlanta, GA 30326
404.926.5000https://www.suntrustrh.com
Wachovia Securities LLC –Wells Fargo Advisors
401 South Tryon St.
Charlotte, NC 28202
704.379.9283
www.wachoviasec.com
Joint Ventures and Strategic Alliances
Partnerships can be a survival strategy primarily adopted by small, high-tech firms in need of a large
marketing partner. The number of alliances entered into by small companies has continued to rise in
recent years. An alliance can enable a small firm to expand revenues without taking on additional
employees. The term strategic alliance has come to mean everything from the simplest transactional
relationship to licensing and outsourcing -- to anything short of a merger.
A growing number of large corporations are funding small companies as a pipeline for new products
and markets. A small business teaming with a corporate giant may obtain start-up or research and
development funds at better terms than the average venture capital deal. These alliances generally
involve an entrepreneur receiving an infusion of capital in exchange for giving a large corporation the
right to sell or market their product. Since the large corporation is more interested in the technology
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
than in the small company, it will often front money to develop a product in exchange for a low
percentage stake in the small company.
In forming partnerships with larger firms, small firms must ensure that their partners have the same
strategic intent. Larger firms will look for a clean balance sheet, a strong pattern of growth, and a
commitment to quality in expanding small companies. The more divergent the partners’ expectations,
the less likely the partnership will be successful. The key reasons for failure are unequal levels of
technical or business competence, and low prioritization by one or both companies for the project.
Crowdfunding
Crowdfunding (alternately crowd financing or crowd-sourced fundraising) is the collective effort of
individuals who network and pool their money, usually via the Internet, to support efforts initiated by
other people or organizations. There are two primary types of crowdfunding: (1) donation-based and
(2) investment-based or equity crowdfunding.
Donation-based crowdfunding is used to support a wide variety of activities, including art and film
projects, new inventions, research, civic projects, charitable causes, start-up companies, etc.
Individuals donate In exchange for a reward or perk (e.g. recognition, product, discount, free passes).
Individuals do not receive any ownership or equity stake in the venture. Each campaign is set for a
goal amount of money and a fixed number of days. Popular sites include Kickstarter
(www.kickstarter.com) and Indiegogo (www.indigogo.com).
Crowdfunding can also refer to funding a company by selling small amounts of equity to many
investors. This form of crowdfunding was recently addressed in the JOBS Act legislation that provides
the ability for the general public to receive company equity in exchange for funding. The Securities and
Exchange Commission (SEC) is in the process of developing rules for crowdfunding investments by
accredited and non-accredited investors. Until the new guidelines are finalized, crowdfunding
platforms will not legally be able to exist as equity based models without operating under the license
of a broker-dealer. The SEC currently expects to issue equity crowdfunding rules in Fall 2013.
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
CHAPTER 7: PRIVATE, NOT-FOR-PROFIT AND LOCAL
PROGRAMS
NC Biotechnology Center (NCBC)
The mission of the Biotechnology Center is to ensure that North Carolina gains long-term economic
benefits from the development and commercialization of biotechnology statewide. The Center, which is
primarily funded by the North Carolina General Assembly, provides financial assistance to
biotechnology companies.
Source: www.ncbiotech.org/billion
North Carolina Biotechnology Center
15 T. W. Alexander Dr.
POB 13547
Research Triangle Park, NC 27709-3547
919.541.9366
[email protected]
www.ncbiotech.org
Greater Charlotte Office: 704.687.8563
Eastern Office (Greenville): 252.328.9981
Piedmont Triad Office (Winston-Salem): 336.725.6672
Southeastern Office (Wilmington): 910.763.5747
Western Office (Asheville): 828.670.3394 Ext. 101
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Company Inception Loan
The CIL Program is designed to help bridge the early-stage funding gap that many North Carolina
biotechnology companies face. Through the CIL program, loans of up to $50,000 are available for
biotechnology companies in North Carolina. This program supports non-scientific business inception
and related activities that are critical to the early-stage start-up of a biotechnology company. Contact
Joseph Nixon at [email protected] with questions regarding this program or to schedule a
preliminary meeting.
Small Business Research Loan Program (SRL)
The Small Business Research Loan Program funds research leading to the development or refinement of
a product or process with commercial potential. North Carolina biotechnology companies may be
eligible for loans of up to $250,000. The availability depends, in part, upon successfully meeting
research milestones. To date, the program has provided over $10 million in seed capital to over 60
small companies for early stage research and development. In fiscal year 2012, 5 loans were made,
totaling $795,051. Contact Shobha Parthasarathi at (919) 541-9366 or
[email protected] with questions regarding this program or to schedule a
preliminary meeting.
Strategic Growth Loan (SGL)
The SGL Program is designed to help bridge the early-stage funding gap that many North Carolina
biotechnology companies face. Through the SGL program, loans of up to $250,000 are available for
biotechnology companies in North Carolina. Importantly, SGL funds must be matched by an equal
investment or loan from one or more organized angel funds or networks (“Angel Groups”) or venture
capital funds (“VCs”). This program is intended to fund companies to reach specific and meaningful
milestones that will enable them to obtain further funding from private investors. Contact Joseph Nixon
at [email protected] with questions regarding this program or to schedule a preliminary
meeting.
Technology Enhancement Grant (TEG)
The Technology Enhancement Grant (TEG) Program provides non-repayable grant funding to North
Carolina universities or other NC research institutions through their respective technology transfer
offices. Under this program, awards of up to $50,000 are available to fund a commercially-focused
research study to enhance the university’s licensing position for a commercially promising technology.
The proposed project will ideally incorporate study endpoints designed to directly addresses license-
enabling milestones required by potential licensees. Contact Dr. Rob Lindberg at (919) 549-8826 or
[email protected] with questions regarding this program or to schedule a preliminary
meeting.
Business Acceleration and Technology Out-licensing Network (BATON)
BATON leverages $50,000 in Technology Enhancement and Acceleration Model (TEAM) loans from the
Biotechnology Center with in-kind or contributed services from certified stakeholders such as law firms,
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
banks and accountants to accelerate the commercialization of promising technologies. BATON paves
the way for new company spinouts by staging many of the essential start-up activities such as
researching and creating business plans, identifying potential intellectual property and corporate law
firms, developing a banking relationship and presenting the company to local angel and venture
groups, thereby positioning the startups for future investment and growth.
Business Development Loan Program
The Business Development Loan Program provides financial assistance to North Carolina biotechnology
firms with low-interest matching loans for early stage business development-related activities. This
loan supports non-scientific activities critical to the future commercialization of a company's
technology. A company may request up to $25,000 (minimum $15,000) through the Business
Development Loan program and must provide a dollar-for-dollar match of these funds. The company
will be required to certify it can provide matching money. In-kind contributions cannot be considered
toward the company match.
Collaborative Funding Grant (CFG) Program
The Collaborative Funding Grant (CFG) supports a university-company partnership that will advance a
company’s technology toward the marketplace. This grant provides funds for a post-doctoral fellow or
technician in a university lab to conduct research on a project of commercial interest. University
investigators and companies first form the collaboration and then apply together through the
university. The CFG is jointly sponsored by the Biotechnology Center and the Kenan Institute for
Engineering, Technology and Science at North Carolina State University.
Any North Carolina company may submit a CFG proposal in conjunction with any public or private
North Carolina university. CFG Program awards are disbursed to the participating university. The award
amount from NCBC/Kenan is between $40,000 and $50,000 per year, depending on the size of the
participating company. The required matching amount from the participating company is between
$10,000 and $20,000 based on a sliding scale with smaller companies required to contribute fewer
funds. Regardless of company size, the total cash amount provided to the university, for research is
$60,000. The university must provide an in-kind match of $20,000, bringing the total package to
$80,000 per year.
Small Business Innovation Research (SBIR) Bridge Loan
The SBIR Bridge Loan program provides financial assistance in the form of low-interest loans as gap
funding to maintain the momentum of technology development begun as a Phase I project and
building toward Phase II funding.
North Carolina companies, who received Phase I SBIR grants for biotechnology-related product
development, processes, or services, are eligible for consideration for financial support. It is assumed
the candidate company has completed (or is nearing completion) of a successful Phase I SBIR project
and intends to apply for SBIR Phase II grant funding (there is no requirement to eventually receive the
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Phase II grant). Up to $150,000 may be requested to support research activities lasting up to six
months.
Entrepreneur Focused Support Groups, Councils and Networks
There are several entrepreneur focused support groups -- often identified as councils, networks, or
roundtables -- in the North Carolina network. These groups have been organized in most cases by local
business owners to provide valuable resources to entrepreneurs in their region. Their individual services
vary slightly, but all are focused on providing unique educational and networking opportunities to their
members.
The Council for Entrepreneurial Development (CED) is the largest entrepreneurial support organization
in the world and maintains a current contact list of venture funds operating in North Carolina. The
CED’s annual Venture Capital Conference, held in April, matches entrepreneurs with venture capitalists
and private investors throughout the country. Entrepreneurs seeking capital submit a business plan to
the selection committee; firms selected have the opportunity to present their request to over 300
investors attending the event.
Entrepreneurial Councils & Networks in NC
Blue Ridge Entrepreneurial Council (BREC)
c/o Advantage West
134 Wright Brothers Way
Fletcher, NC 28732
828.687.7234
www.brecnc.com
Council for Entrepreneurial Development
CED Entrepreneurship Center
Strickland Bldg @ The American Tobacco
Campus
224 Blackwell Street, Suite B012
Durham, NC 27701
POB 13353
Research Triangle Park, NC 27709
919.549.7505
www.cednc.org
NorthEastern Entrepreneurial Roundtable
(NEER)
Rocky Mount Area Chamber of Commerce
POB 392
Rocky Mount, NC 27803-0392
252.973.1212
SouthEastern Entrepreneurs Roundtable
Methodist University
5400 Ramsey St.
Fayetteville, NC 28311
910.630.7642
NC Rural Economic Development Center
In July 2013, the NC General Assembly eliminated funding for the NC Rural Economic Development
Center, and created a new Rural Economic Development Division within the NC Department of
Commerce. The new division will oversee an infrastructure grant program for rural counties, and a new
program to provide “matching grants or loans” to local governments in economically distressed
counties for reuse of vacant buildings/properties, or to construct/expend rural health care facilities.
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Information on these programs will be added online as it becomes available.
Microenterprise Loan Program
The Microenterprise Loan Program provides loans and business services to self-employed individuals
and other very small firms. The program helps rural people attain self-sufficiency by providing the
opportunity for self-employment and small business growth. It provides loans for start-up or expansion
of small businesses by individuals who do not qualify for conventional loans. The program serves all 85
rural counties in North Carolina. Specific emphasis is placed on providing services to rural, low-income,
female/minority participants.
Four local lending sites operate group-based lending programs. Individual entrepreneurs participate in
these programs by forming groups of four to ten people. Once certified, the group can make credit
decisions for its individual members. The group makes loans, and all loans must be current in order for
the group to consider extending additional loans. This program is based on a tiered lending structure
that allows an initial loan of up to $2,500 per individual within the group. When that loan is paid off,
the next loan may be for up to $5,000. After this is successfully repaid, a loan of up to $8,000 may be
issued.
The individual lending program uses a referral network to provide access to capital. Loan requests are
directed from referrals straight to the Rural Center where the credit committee reviews the loan
application and makes a loan decision. Up to $25,000 may be loaned under the individual program
based on demonstrated need. All loans must be secured and the process for obtaining credit is similar
to that used by a commercial bank.
One local site operator, NC REAL Enterprises, provides individual-based loans in conjunction with a
training program. REAL provides loans up to $25,000 to youths and adults who complete the Real
Entrepreneurship course at a participating high school or community college and complete a
comprehensive business plan.
North Carolina Rural Economic Development Center
NC Microenterprise Loan Program
4021 Carya Dr.
Raleigh, NC 27610
919.250.4314
www.ncruralcenter.org/loans/micro.htm
Microenterprise Loan Program Participants
Carteret Microenterprise Loan Program
Carteret Commmunity College
3505 Arendell St.
Morehead City, NC 28557
252.222.6016
[email protected]
Microenterprise Loan Partnership, Lenoir
Community College
327 North Queen St.
Kinston, NC 28501
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252.522.8021
Type: Group
Counties: Greene, Jones, Lenoir, and Wayne
www.lenoircc.edu/Small_Business_Center/micl
oanindex.htm
Mountain BizWorks, formerly Mountain
Microenterprise Fund
153 S. Lexington Ave.
Asheville, NC 28801
828.253.2834
Type: Group
Counties: Buncombe, Cherokee, Clay, Graham,
Haywood, Henderson, Jackson, Macon,
Madison, Polk, Swain, and Transylvania
www.mountainbizworks.org
NC Institute of Minority Economic
Development
114 W. Parrish St.
Durham, NC 27701
919.956.8889
Type Individual
Counties: All 100
www.ncimed.com
NC REAL Enterprises
3739 National Dr., Suite 110
Raleigh, NC 27612
919.781.6833
Type: Individual
Counties: active programs in 74 counties
www.ncreal.org
River City CDC
501 East Main St.
Elizabeth City, NC 27909
252.331.2925
Type: Individual
Counties: Camden, Chowan, Martin,
Pasquotank, Perquimans, and Tyrell
www.rivercitycdc.org
Roanoke Electric Co-op
POB 1326
Ahoskie, NC 27910
252.209.2236
Type: Individual
www.roanokeelectric.com/default.aspx
Tyrell CDC
POB 58
Columbia, NC 27925
252.796.1991
Type: Individual
Upper Coastal Plains Council of Governments
Post Office Drawer 2748
1309 South Wesleyan Blvd
Rocky Mount, NC 27802
252.446.0411
Type: Individual
Counties: Edgecombe, Halifax, Nash,
Northampton and Wilson
www.ucpcog.org
Yadkin Valley Economic Development District
Inc.
POB 1840
205 South Jackson St.
Yadkinville, NC 27055
336.679.2200
Type: Individual
Counties: Davie, Surry, Stokes, and Yadkin
Defense Ventures Fund
In mid-2005 Neuse River Development Authority received approval from the Golden LEAF Foundation for a
grant to the Authority in the amount of $2 million to establish a Defense Ventures Fund. The Fund became
active in 2006 and is designed to assist North Carolina companies or companies re-locating to North Carolina
that are currently active or wish to become active in the Defense Contracting Industry. The “Defense”
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definition includes all branches of the Armed Forces, Department of Defense, Homeland Security as well as
certain State Department activities such as embassy protection, etc. While the Fund concentrates on
manufacturing companies, all service and other Defense related industries will be considered for eligibility. The
Fund can invest up to $250,000 per company in the form of “Subordinated Debt”. Contact Guy Williams at
252.638.6724
North Carolina Capital Access Program
The Rural Center, in conjunction with 11 participating banks, initiated this program in 1994. The program
provides loans to small and medium-sized businesses through participating banks in the state. Permissible
Borrowers include corporations, partnerships, joint ventures, sole proprietorships, state-designated charitable,
religious, or other non-profit or eleemosynary institutions, government-owned corporations, consumer and
marketing cooperatives, and faith-based organizations. A special reserve fund was created to protect the
institutions against losses from loans enrolled in the program. Funds for the Capital Access Program reserve, in
the amount of $4 million, have been provided by the Golden LEAF Foundation, the Appalachian Regional
Commission, the US SBA, and the N.C. General Assembly. These funds are expected to generate over $120
million in small business loans.
This enables North Carolina’s financial institutions to increase lending for business start-ups and expansions
without sacrificing credit quality in the bank’s overall loan portfolio. The average loan size is just over $50,000.
Any legal business entity incorporated in one of the 85 rural counties of North Carolina is eligible. Businesses
interested in the program should contact a commercial loan officer of one of the participating financial
institutions.
Participating institutions include Branch Banking & Trust Company, East Carolina Bank, First Bank of Troy, First
Citizens Bank, First National Bank of Shelby, High Country Bank, Lumbee Guaranty Bank, Macon Bank, Neuse
River Development Authority, Piedmont Bank, Randolph Bank & Trust Company, and Yadkin Valley Bank
North Carolina Rural Economic Development Center
4021 Carya Dr., Raleigh, NC 27610
919.250.4314
www.ncruralcenter.org
Clean Water Partners Program
Clean Water Partners Program assists communities with planning activities, such as feasibility studies, capital
improvement plans and engineering studies, for water and sewer infrastructure.
Planning grants may be used for projects that address a critically needed solution to an infrastructure problem.
The aim is to assist rural communities in preparations that will lead to affordable solutions in meeting their
water and waste needs. Priority will be given to communities that are in violation of public health and
environmental rules and regulations, to get them back into compliance. Documentation of the critical need is
required to support the grant request.
Additional details may be found at www.ncruralcenter.org, or contact Julie Cubeta at (919) 250-4314 or
[email protected] (To go straight to the application, see the Find It Fast menu on the right, and
click on “Grant application and Reporting Forms.”)
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Economic Infrastructure Program
The N.C. Rural Economic Development Center announces $5.5 million in grants to create jobs, provide clean
water and assist with economic development in rural counties. The 36 grants will create 660 jobs and assist
projects benefiting more than 32 counties. (4/25/13)
Economic Infrastructure Program supports rural infrastructure projects associated with an expanding business or
a new business location. Grant awards vary according to the type of project. Generally, for water and sewer,
natural gas and broadband, grants are available for up to $10,000 for each job created, with a maximum grant
of $1 million or one-half the total project cost, whichever is less. Other grants are limited to $5,000 per job,
with a maximum of $500,000 or one-half the total project cost.
Applications are available at www.ncruralcenter.org (See the Find It Fast menu on the right, and click on “Grant
Application and Reporting Forms.”) For other inquiries, contact George T. Collier at (919) 250-4314 or
[email protected].
Building Reuse and Restoration Grants
Building Reuse and Restoration Grant spurs business activity and job creation by maximizing the economic
potential of existing structures. Grants assist communities with the reuse of vacant buildings and with the
expansion and renovation of buildings occupied by certain types of business.
$5,000 or $10,000 per job is available depending on type of use and location. The maximum for any grant is
$480,000 or one-half the renovation cost, whichever is less.
Applications are available at www.ncruralcenter.org (See the Find It Fast menu on the right and click on “Grant
Application and Reporting Forms.”) For other inquiries, contact Melody Adams at (919) 250-4314 or
[email protected].
Rural Hope (Rural Health Care Initiative)
Rural Hope spurs economic activity and job creation by assisting in the construction and/or renovation of rural
health care facilities. Rural Hope grants help local governments, in partnership with private or nonprofit health
care agencies, build or renovate health care facilities. These facilities may include – but are not limited to –
hospitals, urgent care centers, hospice centers, elder care facilities and offices for physicians, dentists, vision
care specialists and mental health care providers
Applications are available at www.ncruralcenter.org (See the Find It Fast menu on the right and click on “Grant
Application and Reporting Forms.”) For other inquiries, contact Melody Adams at (919) 250-4314 or
[email protected].
Rural Community Mobilization Project
Rural Community Mobilization Project helps laid-off rural workers and other adults facing unemployment or
underemployment return to full-time jobs. Grants encourage rural organizations to collaborate on workforce
development strategies that connect job seekers to jobs. Successful applications will present a demand-driven
workforce development project with the involvement of employers to ensure that participants can find jobs after
receiving training and other services. Successful applications will also demonstrate new or expanded
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collaboration among public and nonprofit service providers and between workforce and economic development
organizations.
Grant guidelines are available at www.ncruralcenter.org (See the Find It Fast menu on the right and click on
“Grant Application and Reporting Forms.”) For other inquiries, contact Michael Aheron at
[email protected] or Anne Bacon at [email protected]. Both can be reached at (919) 250-4314.
Economic Innovation Grants Program
Economic Innovation Grants spur business activity, job creation and investment in North Carolina’s rural
communities by supporting innovative economic development project in priority funding areas. The program
serves as a laboratory in which innovative economic development strategies can be employed and tested in
rural communities. The goal of the program is to ensure that rural areas benefit from advances in economic
development research and practice through economic growth, good jobs and a higher quality of life.
The program guidelines and intent to apply form are available at www.ncruralcenter.org (See the Find It Fast
menu on the right and click on “Grant Application and Reporting Forms.”) For other inquiries, contact Brett
Altman (919) 250-4314 or [email protected].
Project GATE (Growing America Through Entrepreneurship)
Project GATE encourages self-employment as a career alternative for interested laid-off workers. GATE is a
scholarship program that provides free training and coaching to help dislocated workers interest in starting a
business. The North Carolina GATE program is offered by the Rural Center in partnership with several key North
Carolina partners, including the N.C. Small Business Center Network.
Interested individuals may apply through their local JobLink Career Center or visit the website,
www.ncprojectgate.org. For more information, contact Barry Ryan at (919) 250- 4314 or
[email protected].
New Generation Ventures
New Generation Ventures encourages self-employment as a career option for rural young adults ages 18-30. It
is a statewide program for young adults who will start a business in one of North Carolina’s 85 rural counties.
Coaching and training are delivered by phone, email and online. In addition, classroom training and face-to-face
business counseling are available through a network of partnering organizations, including the North Carolina
Community College System – Small Business Center Network.
With public and private support, the center in 2012:
? Awarded 11 grants to engage teams of young people in community improvement projects.
? Awarded 14 grants to train and place rural young people in high-demand career fields with job
opportunities close to home.
? Worked with 133 young adults interested in starting businesses in rural areas. A dozen business
startups had created 32 jobs by year end.
? Held the first of six planned workshops on how communities can make themselves more welcoming
places for young people.
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Interested individuals may learn more, watch an orientation video and apply online at www.ncruralcenter.org.
For more information, contact Barry Ryan at (919) 250-4314 or [email protected].
N.C. Capital Access Program
N.C. Capital Access Program stimulates economic activity by expanding finance options for business statewide.
By reducing risk, NC-CAP encourages banks and other qualified lenders to consider loans that otherwise fall just
outside conventional underwriting standards. The program matches an up-front fee, typically 2 percent to 7
percent, paid by the lender and borrower. The combined amount is deposited into a pooled reserve fund held by
the lender. The pooled fund includes matching fees from all NC-CAP loans made by the institution and cover
losses in the event of a default.
An up-to-date list of participating lenders and other details about the program are available at
ncruralcenter.org. Follow the link to Business Capital on the left-hand menu. Businesses or lenders seeking
additional information may call (919) 250-4314.
N.C. Loan Participation Program
The Loan Participation Program stimulates economic activity by expanding finance options for businesses
statewide. It is designed to increase lending by reducing a lenders risk through the purchase of a portion of an
eligible loan. Lender participation is voluntary Nearly 30 lenders across the state have enrolled in the program.
More are being recruited. Loans generally range from $250,000 to the maximum of $5 million. Only term loans
are eligible.
An up-to-date list of participating lenders and other details about the program are available at
www.ncruralcenter.org. Follow the link to Business Capital on the left-hand menu. Businesses or lenders
seeking additional information may call (919) 250-4314.
New Generation Leaders
New Generation Leaders helps young leaders become more active in the civic and economic life of their
communities, in part through a community improvement project. Challenge grants encourage the formation of
youth and young adult community action teams to design and implement community improvement projects.
The teams recommend actions that focus on making the community a more attractive and welcoming place for
youth and young adults.
Information and application materials will be available at ww.ncruralcenter.org. (See the Find It Fast menu on
the right, and click on “Grant Applications and Reporting Forms.”) For additional information, contact Misty
Herget at [email protected] or at (919) 250-4314
Rural Economic Development Institute (REDI)
REDI prepares a broad, diverse group of rural leaders with the knowledge and skills necessary to manage the
challenges of economic transition in their communities and promote sustained economic and community
development. The institute is packed into nine tightly structured days spread over three months. Each three-day
session includes lectures discussions, learn-by-doing exercises, meals and socials. By participating in the
institute individuals:
? Increase understanding of the latest strategies in economic and community development
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? Improve leadership and team building skills
? Understand more about the resources available to their community and how to take advantage of
them
? Learn the fundamentals of long-range strategic planning and how to make it work
? Join a network of rural leaders who regularly share information and experience
Information and application materials are available at www.ncruralcenter.org. (See leadership & Engagement
on the bottom left, click on “Leadership Training” and then on “2013 REDI Application Brochure.”) For more
information, please contact Misty Herget at [email protected] or (919) 250-4314.
Child Day Care Loan Guarantee Fund
Loans are provided through three participating banks to childcare providers in rural distressed communities to
start or expand childcare facilities. Participating banks include Centura, Bank of America, and Wachovia. The
loan can be used to finance land, building, or equipment needs for start-up or expansion facilities. The program
guarantees 80 percent of the loan amount up to a maximum of $75,000. Loans are limited to 50 economically
distressed counties as designated by the state.
Rural Venture Fund
The Rural Venture Fund (RVF) is a new source of capital specifically designed for qualified businesses in
economically distressed (Tier 1) counties of North Carolina. Investments will carry the expectation of a return,
but on less demanding terms and over a longer period of time than available with more traditional financing.
Target companies for investments will typically be classified as higher risk and in need of capital in the range of
$50,000 to $350,000. The RVF offers a variety of investments from equity to subordinated debt.
Applicants are limited to existing businesses with owner management experience that are located in Tier 1
counties. Eligible businesses must demonstrate future growth and job creation potential and show that the
owner would not receive equity or subordinated debt “but for” this fund.
The RVF will assist clients in the successful management of their long-term growth. Through a collaboration
with the Small Business & Technology Development Center (SBTDC) and the University of North Carolina
System, several business schools will help provide specialized technical assistance to clients (Appalachian State,
East Carolina, NC A&T, NC Central, NC State, UNC Pembroke and Western Carolina.
The Rural Venture Fund began operations with $6.8 million in available capital in late 2007 with funding from
the NC General Assembly ($3.8 million), Golden LEAF ($500,000) and the Rural Center ($2.5 million).
NC Rural Center
4021 Carya Dr.
Raleigh, NC 27610
919.250.4314
Director: Don Stewart
[email protected]
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NC State Small Business Credit Initiative
The NC State Small Business Credit Initiative is helping make capital available for business startups and
expansions across the state. The initiative works primarily through traditional lenders such as banks and credit
unions. By reducing the risks involved, it allows lenders to approve some business loans they otherwise could
not. The initiative also invests in venture capital and angel funds, which in turn make equity investments in
North Carolina businesses.
The initiative is made possible by $46.1 million in federal funding under the Small Business Jobs Act of 2010.
Gov. Beverly Perdue designated the Rural Center to administer the program in all 100 counties.
With three component programs, the initiative is expected to enable more than $600 million in business loans
and equity investments by 2016.
The three components:
The NC Capital Access Program provides matching reserve funds for business loans that are just outside a
lender's usual standards. The average NC-CAP loan is $100,000. When a loan is approved and enrolled in NC-
CAP, the borrower pays a fee, which is matched with money from the program. The funds together are
deposited into a reserve account held by the lender, to offset losses in case of default. Potential borrowers may
apply through their local lenders.
The N.C. Loan Participation Program reduces a lender's risk by purchasing up to 20 percent of a loan. The
program typically assists loans of $250,000 to $5 million. Special consideration may be given for loans to
businesses in underserved communities and to businesses owned by women and minorities. Potential borrowers
apply through their local lenders.
The N.C. Fund of Funds Program has invested $10 million in four venture capital and angel funds, which in turn
invest in North Carolina businesses as early as the conceptual stage: Hatteras Ventures, IDEA Fund, IMAF and
Salem Investment. The individual funds are responsible for finding and assessing potential investments in North
Carolina businesses.
NC Rural Economic Development Center
4021 Carya Drive
Raleigh, NC 27610
Telephone: 919-250-4314
Fax: 919-250-4325
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NC IDEA (Innovative Development for Economic Advancement)
NC IDEA is a 501(c)(3) not-for-profit organization created to serve as a catalyst for young, high-growth,
technology companies in North Carolina. NC IDEA assists entrepreneurial companies with seed and early stage
funding through traditional venture capital, as well as pre-venture stage funding via a grants program. NC
IDEA focuses on helping companies in the following areas: IT software IT infrastructure; materials technologies
and biomedical applications.
Small grants are available to fund “proof-of-concept” business activities that validate potential markets, reduce
business risks, and advance projects to the point at which they are suitable for private equity investment. NC
IDEA will make semi-annual solicitations for ideas with the potential to become high-growth companies, and
award selected projects an amount of up to $50,000.
NC IDEA
334 Blackwell Street
Suite B-015
Durham, NC 27701
919.941.5600
www.ncidea.org
Self-Help – Community Development Financial Institution (CDFI)
Self-Help consists of the non-profit Center for Community Self-Help and two financing affiliates, Self-Help Credit
Union and Self-Help Ventures Fund. Self-Help Credit Union is a federally insured, state-chartered credit union
that provides commercial loans for people who cannot obtain financing from conventional lenders. Self-Help
Ventures Fund provides higher risk commercial financing and develops real estate projects.
Since 1980, Self-Help has invested $5.96 billion in financing to 71,748 families, individuals, and organizations.
For small business lending, since 1980 Self-Help has made $446 million in loans to over 3,000 entrepreneurs,
creating or maintain over 26,000 jobs. Self-Help focuses on segments underserved by traditional loan sources:
minority-owned businesses have accounted for 45 percent of the loan proceeds and women-owned businesses
have received 42 percent of the proceeds. In addition to participating in the SBA 7(a) program, the SBA 504
program, the SBA MicroLoan program, and the USDA Intermediary Relending program, Self-Help also
administers a number of programs in conjunction with other organizations.
Self-Help provides a variety of loan products in the $500,000 to $1.5 million range. It will work with any viable
business but specializes in several industries to better serve firms in these sectors of the economy. Its staged
microloan program helps very small businesses and self-employed people establish their operations with loans
in the $500 to $3,000 range. Self-Help’s Community Facilities Fund provides financing and technical assistance
to small businesses and non-profits that provide human services, such as child care centers or assisted housing
projects. A more recent lending initiative has focused on the sustainable development industry -- firms whose
products or services are environmentally-focused and advocate for policies that promote responsible growth.
Examples include organic farms, ecotourism enterprises, and recycling businesses.
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Special Child Care Business Programs
Self-Help has administered the Department of Health and Human Services (DHHS) Child Care Revolving Loan
Fund since 1992. This loan fund allows Self-Help to offer subsidized interest rates and give special attention to
those working in early childhood education. The funds are available at a 5% fixed interest rate for nonprofit
providers serving subsidized children. Proceeds may be used for working capital, equipment purchase, vans,
renovations, improving star levels, and obtaining licensure. It cannot be used for purchasing a building.
For counties affected by the 1999 flood in the eastern region of the state
6
, Self-Help has special funds available
at a 5% fixed interest rate to purchase land, build facilities, and make major renovations. This program is
available to both for-profit and non-profit providers who serve subsidized children and operate three or fewer
centers. An option available to for-profit providers that want to expand their current location or build new
facilities include loans from the SBA. The product offers low fixed rate financing for the purchase of buildings,
land, machinery, and equipment. Down payments can be as low as 10%.
In addition to its loan products, in the fall of 2002 Self-Help updated its Business Side of Child Care Manual.
This manual is a reference tool for child care advocates, technical assistance providers, and lenders. It provides
a wealth of information on the business aspects of operating a child care center and child care lending. The
manual is available to download free of charge at: www.selfhelp.org/business-and-nonprofit-loans/business-
and-nonprofit-files/business-nonprofit-technical-assistance-
resources/Business.Side.of.Child.Care.Manual.pdf/view?searchterm=child%20care - or hard copies are available
for $10 each from Self-Help. A section on financing child care programs and funding sources begins on page 91.
6
An illustrative map can be obtained from Self-Help. The eligible counties are: Beaufort, Bertie, Bladen, Brunswick, Camden, Carteret, Chowan,
Columbus, Craven, Currituck, Dare, Duplin, Edgecombe, Gates, Greene, Halifax, Hertford, Jones, Lenoir, Martin, Moore, Nash, New Hanover,
Northampton, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Pitt, Robeson, Tyrrell, Washington, Wayne, and Wilson.
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Self-Help -- State Headquarters
301 West Main St.
POB 3619
Durham, NC 27702
919.956.4400 or 800.476.7428
www.selfhelp.org
Lending Offices
ASHEVILLE
34 Wall St., Suite 704
Asheville, NC 28801
800.229.7428
CHARLOTTE
926 Elizabeth Ave., Suite 302
Charlotte, NC 28204
800.394.7428
FAYETTEVILLE
100 Hay St., Suite 300
Fayetteville, NC 28301
910.354.1014
GREENVILLE
301 South Evans St., Suite 306
Greenville, NC 27858
800.893.9669
Good Work, Inc.
This organization offers a long-term, comprehensive business development program that includes
business loans, business training, and on-going support. The loans are provided in association with
Self-Help and can be used for starting or expanding a business in the Research Triangle area. The
program is administered through the formation of small groups called “Loan Circles.” Members of
these Loan Circles can apply for loans starting at $1,000. As circle members repay their loans, larger
loans of up to $10,000 become available. Instead of requiring collateral, Good Work relies on the
support of the circles to ensure that members repay their loans and grow successful businesses. No
member of a Loan Circle can receive funds unless all other members are current with their loan
payments. Since the beginning of the program in 1991, more than 5,000 businesses have been
assisted. In that same period, over $110,000 in loans have been awarded.
Good Work, Inc.
POB 6013
Raleigh, NC 27628
919.817.8507
www.goodwork.org
NC Economic Opportunities Fund / Dogwood Equity
Dogwood Equity was founded in 2002 and is headquartered in Raleigh, North Carolina with a satellite
office in Charlotte, North Carolina. Dogwood Equity is a private equity fund that makes equity
investments in control buyouts and select non-control investments in closely-held companies located in
the Southeastern United States. Dogwood focuses exclusively on the small cap market, which
Dogwood defines as companies with less than $75 million in revenues.
Dogwood's first fund was $74 million and focused on companies in North Carolina. The principals
executed 11 investments in Fund I. Dogwood II targets companies in the Southeastern United States,
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specifically from Maryland to North Florida and east of the Mississippi River. The principals at
Dogwood possess a unique combination of skill sets with over 85 years in economic development,
commercial banking and high risk lending, traditional private equity, leveraged finance and investment
banking.
NC Economic Opportunities Fund (an SBIC)
c/o Dogwood Equity, LLC
4101 Lake Boone Trail, Suite 120
Raleigh, NC 27607
919.256.5000
www.dogwoodequity.com
Business Consortium Fund
The Business Consortium Fund Inc. (BCF) is a not-for-profit minority development company of the
National Minority Supplier Development Council (NMSDC). Forty regional affiliates -- including
Carolinas Minority Supplier Development Council -- work with certified lenders to help finance
expenses or purchases related to a specific transaction. Certified lenders in North Carolina include
Branch Banking & Trust (BB&T), First Charter, and Bank of America.
The BCF was developed to assist ethnic and racial minority-owned firms in accessing working capital
needed to finance growth. The BCF provides contract refinancing to businesses through a network of
local participating banks. The borrower must be a Certified Minority Business in good standing with an
affiliated regional council of the NMSDC. Loans are provided to creditworthy businesses at the current
prime rate. A maximum of $500,000 in total loans per borrower may be outstanding at any one time,
while the minimum is $75,000.
Business Consortium Fund, Inc.
305 Seventh Ave., 20th Floor
New York, NY 10001
212.243.7360
www.bcfcapital.com
Carolinas Minority Supplier Development Council
What is the Carolinas Minority Supplier Development Council? Carolinas MSDC (or the Council) is a
membership organization of major corporations, financial institutions, government agencies, and
universities that operate within North or South Carolina. It promotes and facilitates the development of
business relationships between its members and certified minority-owned business enterprises. The
Council works to expand business opportunities for minority-owned companies in an effort to build a
stronger, more equitable society by supporting and promoting minority business development.
Carolinas MSDC has over 170 corporate members and approximately 425 certified minority-owned
businesses. Find a current list of corporate members at www.carolinasmsdc.org/corporations/cmsdc-
corporate-members/. The Council organizes networking events, educational sessions and unique
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opportunities that serve as venues for MBEs and corporate members to come together and identify
mutually beneficial opportunities to work with one another.
The Carolinas MSDC is a private, non-profit organization categorized by the IRS as 501(c) (3). It is
funded by membership dues, certification fees, and proceeds from program activities. In addition, funds
are also received from the National Minority Supplier Development Council based on allocations by
national members with operations in the Carolinas.
Carolinas Minority Supplier Development Council
9115 Harris Corners Parkway, Suite 440
Charlotte, NC 28269
704.549.1000
www.carolinasmsdc.org
Natural Capital Investment Fund (NCIF)
The Natural Capital Investment Fund (NCIF) makes subordinated debt and equity investments in
environmental and natural resource-based small businesses. Founded in 2001, NCIF is certified as a
"Community Development Financial Institution Fund" (CDFI) by the U.S. Department of the Treasury.
NCIF is affiliated with The Conservation Fund, a national nonprofit organization with a unique dual
mission of land and water conservation and economic development,
NCIF targets start-up to expansion stage companies with market traction and growth opportunities in
the following sectors: value-added and sustainable agriculture, sustainable forestry and forest
products, recycling and water conservation, renewable energy and energy efficiency, eco- and heritage
tourism and natural medicines. NCIF offers $15,000 - $250,000 at interest rates reflecting
subordinated debt, or equity risk in financings up to $2 million. NCIF often partners with traditional
lenders, community development funds and government credit-enhancement programs to help reduce
their risk
Rick Larson
Director of Sustainable Ventures, NC Program Director
[email protected]
Chapel Hill, NC
Phone: (919) 951-0113 | Fax: (919) 967-9702
www.conservationfund.org/our-conservation-strategy/major-programs/natural-capital-investment-
fund/contact-us
The Shade Fund
The Shade Fund is a part of The Conservation Fund. The Shade Fund connects individual lenders with
American entrepreneurs running green, forest-related businesses. These small businesses are critical to
keeping our forests – and the rural communities that depend on them – healthy.
To be eligible for a Shade Fund loan, a business must have access to a commercial bank or credit union
and be willing to help Shade Fund measure the loan’s impact on the business. The Shade Fund
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considers two questions when choosing a borrower: will your business use natural resources
sustainably and contribute to the retention of forests and can your business make good use of a small
loan ($15,000 or less) and repay it?
The Shade Fund also provides an opportunity to support green, forest-related business ventures and
entrepreneurs working to turn sound ideas into reality by becoming a Shade Fund lender.
The Shade Fund
Rick Larson, Director of Sustainable Ventures
919.951.0113
The Conservation Fund
1655 North Fort Myer Drive, Suite 1300
Arlington, VA 22209
Sequoyah Fund
The Sequoyah Fund is an independent, non-profit Native American Community Development Financial
Institution (CDFI). The organization evolved from a loan fund program of the Eastern Band of Cherokee
Indians. The program was managed by the business development department. A decision was made to
take this loan fund program through a rigorous reorganization process and establish an independent
Native CDFI that could receive CDFI certification from the US Treasury. The Sequoyah Fund obtained
this certification in 2005. Loan products include small business start-up loans, business expansion
loans, and loans for façade renovation in the Cherokee Central Business District.
Sequoya Fund
810 Acquoni Rd.
POB 1200
Cherokee, NC 28719
828.554.6720
www.sequoyahfund.org
SlowMoney NC
Slow Money NC has $25,000 available for Slow Money loans. Slow Money is looking to make several
loans to local, sustainable farms or local related businesses to start or expand their businesses.
Slow Money NC lets you reconnect with a portion of the money that you entrusted to strangers in
faraway places and, instead, help build a more local, durable economy from the soil up! When you
make a loan to a farmer or other local food enterprises so they can expand and flourish, you can truly
enjoy the fruits of their labor.
Loan applications can be made at www.slowmoneync.com and questions can be directed to
[email protected].
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The Support Center
The Support Center is a statewide nonprofit and Community Development Financial Institution (CDFI)
that provides small business loans and financial training to start-ups and existing businesses; and
lending services to community-based organizations.
Since 1990, The Support Center has been offering services to create economic opportunities for
individuals, families and entrepreneurs throughout North Carolina. Our primary activities include our
Small Business Revolving Loan program, Policy & Research, and Advocacy for Community Development
Credit Unions.
The Support Center’s Small Business Lending Program is designed to actively reach out to underserved
communities to help emerging entrepreneurs realize their economic goals for business ownership,
expansion and job creation. The Support Center creates opportunities for new and existing business
owners to build economic wealth for themselves and their families while improving communities.
Purposes for the loans may include: working capital, equipment purchase and purchase of commercial
real estate. The maximum loan amount is $250,000 with a minimum amount of $5,000. and the rates
and terms are based on the amount of the loan, collateral and the borrower’s credit.
3120 Highwoods Blvd, Suite 350
Raleigh, NC 27604
Tel: 919.803.1437
Fax: 919.896.8612
For Small Business Loans, contact [email protected]
For more information go to their website at: www.ncmsc.org
The Support Center/Fifth Third Bank Enterprise Loan Fund
The Support Center is pleased to announce a new partnership with Fifth third Bank to create short term
micro-loans and seasonal loans for farmers and small businesses for equipment, expansion, and
working capital. This program was made possible in part by a grant from Fifth Third Bank.
The Support Center/Fifth Third Bank Enterprise Fund will be used to meet the growing demand for
micro-financing and will be a great addition to the current lending programs at The Support Center.
The Support Center has noticed over the last year a great increase of loan requests for micro-loans
between $2,000 and $5,000. For more information, please contact the Small Business Lending team at
[email protected]. (The views expressed herein do not necessarily represent those of Fifth
Third Bank.)
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Local Government Programs
Many towns and counties across North Carolina use Community Development Block Grant (CDBG)
income to form local revolving loan funds and loan guarantee programs. In addition, other sources of
federal and state monies have helped to fund various local business programs and initiatives.
Appalachian Regional Commission
The Appalachian Regional Commission (ARC) is a regional economic development agency representing
a unique partnership of federal, state, and local governments. Each year, the U.S. Congress
appropriates funds that the ARC allocates to projects designed to promote business development
within the region. The ARC allocates funds to finance a revolving loan fund (RLF), which makes loans of
up to $200,000. The Southwestern Commission offers a second loan fund — established under EDA
Title IX guidelines — which closely resembles the ARC’s RLF. However, the RLF funded through ARC
can offer up to $15,000 per job created and is also available in Macon County.
ARC’s goals are:
? Increase job opportunities and per capita income in Appalachia to reach parity with the nation;
? Strengthen the capacity of the people of Appalachia to compete in the global economy;
? Develop and improve Appalachia’s infrastructure to make the region economically competitive;
and
? Build the Appalachian Development Highway System(ADHS) to reduce Appalachia’s isolation.
Southwestern Commission Region A
125 Bonnie Lane
Sylva, NC 28779
828.586.1962
www.regiona.org
Counties: Cherokee, Clay, Graham, Haywood, Jackson, Macon, and Swain
More information can be found at:
www.nccommerce.com/Portals/2/Documents/CommunityDevelopment/ARC/ARCNC4yearplan2
0092012FINAL.pdf#search=%22NC%20capital%20highway%22
Carrboro Revolving Loan Fund
The Town of Carrboro created its loan fund in 1986 for projects that result in the creation or retention
of jobs targeted specifically to persons of low to moderate income. Loans from the fund are made to
private non-profit and for-profit firms for the purchase of capital assets or inventory. The interest rate
charged is based on cash flow projections and other means of documented need. The applicant secures
all loans through an agreement conveying to the town a financial interest in the property the applicant
owns.
Loans from the fund are made to private non-profit and for-profit firms for projects such as construction
or renovation of a building, purchasing existing buildings, the acquisition of equipment, and extension
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of utilities or streets to new sites, parking lots, and inventory. Other potential projects are explored
with applicants as long as it can be shown that new employees will be hired or employees who would
otherwise lose their jobs will be retained.
Town of Carrboro
Community and Economic Development
301 W. Main Street
Carrboro, NC 27510
919.918.7319
www.ci.carrboro.nc.us/ecd/CRLF.htm
Charlotte Communities Within A City (CWAC) Equity Loan Program
The City of Charlotte and participating banks offer loan assistance to new and expanding businesses
located in the city’s targeted business districts, threatened and fragile neighborhoods and in the
uptown loop (I-277). The purpose of the loan program is to provide additional equity to enable
borrowers to qualify for conventional small business loans. The city’s loan can be for as much as 20
percent of the total loan funds (includes bank, city and SBA loans). Borrowers are expected to commit
some of the required equity to qualify for the bank loan.
Repayment of the city’s loan is deferred until the bank’s loan has been paid in full or a determination is
made that the borrower can repay the City’s loan; as a result, the city’s loan is considered an equity
investment. Interest on the city loan begins to accrue at the time payments begin. For each $10,000 of
city loan funds, a borrower will create one new position to assist low to moderate-income persons
living in the CWAC boundary. The maximum city loan amount is $100,000, unless the loan is for
manufacturing, in which case the limit is $150,000. A borrower’s personal tangible net worth cannot
exceed $300,000.
City of Charlotte Neighborhood Development Department
Economic Development Office
600 East 4
th
St., Suite 138
Charlotte, NC 28202
704.336.5849
www.ci.charlotte.nc.us
City of Charlotte – Business Equity Loan Program
The City of Charlotte participating with local banks is offering funding to stimulate small business
investment, create and retain jobs, and provide access to capital to small businesses. Eligible
borrowers include start-up and expanding for-profit service, retail, and manufacturing businesses.
Preference will be given to projects located in the City’s Business Corridor Revitalization Geography. If
a business located outside of this geography wishes to participate must be in one of the following
sectors: health, defense, energy/environment, finance, motorsports, and manufacturing.
A borrower’s cumulative City loan cannot exceed $100,000. There must be a minimum of one job
created or retained for every $65,000 of City loan funds. Principal repayment of the City’s loan is
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typically deferred for one to three years based upon project analysis and underwriting as conducted by
the City. Collateral is required and personal guarantees of all principals is required.
City of Charlotte Economic Development Office
Gail Whitcomb, Business Development Representative
600 East Trade Street, Suite 138
Charlotte, NC 28202
704.432.1414
[email protected]
edo.charmeck.org
City of Charlotte – Business Enterprise Loan Fund
The SBE Loan Fund is an innovative public/private fund established to assist small business with
gaining access to capital. The fund, created in 2003, provides more flexible underwriting guidelines
than that of traditional lenders. Eligible businesses include small businesses that meet the Small
Business Enterprise criteria defined by the City of Charlotte and are located in the Anson, Cabarrus,
Gaston, Lincoln, Mecklenburg, Rowan or Union counties.
The SBE Loan Fund is administered by Self Help. The following public and private entities have
contributed to the SBE Loan Fund: Bank of America, Branch Banking and Trust, City of Charlotte, Fifth
Third Bank, First Citizens, Foundation for the Carolinas, Time Warner, Wachovia Corporation, Piedmont
Natural Gas, RBC Centura Bank, Self Help, SouthTrust Bank, John S and James L Knight Foundation,
and Park Sterling Bank.
Self Help
926 Elizabeth Avenue, Suite 302
Charlotte, NC 28204
704.409.5900
www.self-help.org
City of Charlotte – Façade Improvement Grant Program
The objective of the Façade Improvement Grant Program is to remove blight by assisting businesses
and commercial property owners with improving building appearance and by bringing signs, parking,
and landscaping into conformance with current codes. The program provides 50 percent
reimbursement to commercial or industrial businesses or property owners for eligible renovation costs.
The maximum grant awards are based upon building square footage.
Eligible expenses include architectural renovations, improvements to meet current codes, infrastructure
improvements, and demolition expenses of box buildings. Applicants are responsible for obtaining all
necessary governmental permits and authorizations, including building permits. The City will authorize
reimbursement payment after, among other things, completion of the project in accordance with the
approved plan as set forth in contract, together with occupancy of the building by eligible tenants.
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City of Charlotte Economic Development Office
Gail Whitcomb, Business Development Representative
600 East Trade Street, Suite 138
Charlotte, NC 28202
704.432.1414 / [email protected]
edo.charmeck.org
City of Winston-Salem – Economic Development Revolving Loan Program
Funds are available to businesses within the Winston-Salem Neighborhood Revitalization Strategy Area
or located in the Hewitt Business Center at Old Salem. One job that benefits low-to-moderate-income
individuals must be created or retained for each $35,000 borrowed. The business must also make a
good faith effort to make over half of the jobs created or retained available to low or moderate income
people.
The business net worth cannot exceed $6 million, and net profits must average less than $2 million
during the previous two years. The average loan amount is $50,000. The maximum loan term is ten
years. All loans are secured though collateral at a 75 percent loan to value ratio. Businesses must be
willing to contract for free management and technical assistance if the loan committee deems
necessary.
City of Winston-Salem – Community & Business Development Office
400 West Fourth Street, Suite 400
Winston Salem, NC 27101
336.761.2111
www.cityofws.org/Home/Departments/DevelopmentOffice/SmallBusinessCenter/Articles/LoanProgram
City of Winston-Salem – Target Area Business Assistance Program
Funds are available to encourage businesses to locate within distressed areas of the city in order to
create jobs and increase the tax base in these areas. The business must be within the Enterprise
Community boundaries and more than 20 percent of the buildings in the qualifying area must be either
vacant or below minimum code standards. Assistance can be either a grant or a loan. The amount of
assistance is determined based on job creation and the tax base investment. Assistance may be either
in the form of a grant or loan up to a maximum or $500,000. Amount of assistance is determined by
the number of permanent jobs to be created or retained - $2,000 for each permanent job paying over
$8.00/hour and $1,500 for each permanent job paying less than $8.00/hour but more than $1.00/hour
above minimum wage. An additional $500 credit is available for each job filled by a resident of the
Neighborhood Revitalization Strategy Area. Jobs must be created within 24 months of award and
remain in place a minimum of 72 months. The company must demonstrate that city funds are necessary
for the company to move into or expand within the target area. The company must create or retain at
least four (4) permanent jobs. The company must invest at least two dollars of private funds for every
one dollar of city funds requested
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City of Winston-Salem
400 West Fourth Street, Suite 400
Winston Salem, NC 27101
336.761.2111
www.cityofws.org/Home/Departments/CBD/BusinessDevelopment/Articles/TargetAssistance
MAY Coalition
The MAY Coalition is a non-profit corporation seeking to provide employment opportunities for
unemployed and underemployed residents of Mitchell, Avery, and Yancey Counties. There are two loan
programs available. The first program requires that the business create new, full-time, non-seasonal
employment that pays at least $6/hour. A qualifying business may borrow as much as $250,000,
though one job is generally created for each $20,000 loaned. The second program does not require the
creation of new jobs, but rather was created to enhance low to moderate business owners’ income by
offering loans of up to $25,000. The MAY Coalition charges a fixed rate equal to the prime rate at the
time of the loan (not less than 6 percent), and the borrower must pay the attorney’s fee and all
recording fees. The terms for most loans range to five years.
MAY Coalition
POB 704 / 112 Greenwood Rd.
Spruce Pine, NC 28777
828.765.8880
www.maycoalition.org
Serving Mitchell, Avery, and Yancey Counties
Micro-Enterprise Loan Program of Winston-Salem/Forsyth County, Inc.
(MELP)
MELP is a small business loan program providing services in Forsyth County. Micro-enterprises are
defined as small businesses having less than ten (10) employees, and annual sales of less than
$500,000. In addition to small business loans, MELP offers business education courses, technical
assistance, and mentoring. Individual or group counseling is available, as well as numerous other
opportunities for the growth and development of small businesses.
Micro-Enterprise Loan Program of Winston-Salem/Forsyth County, Inc.
301 North Main St., Suite 2601
Winston-Salem, NC 27101
336.722.9600
cityofws.org/default.aspx?mod=Article&level=290&id=955
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Raleigh Small Business Success Program
This program was formed by the City of Raleigh along with major banks in the city to stimulate
business development and create jobs. The program targets those small businesses located in the
Southeast quadrant of the city. The amount of a loan will range from $10,000 to $75,000, subject to
the availability of funds. The maximum term is five years for a general loan or seven years for a real
estate loan. The loan can be used for working capital, equipment, expansion of business services, start-
up funding, or improvement of owner-occupied commercial property.
Raleigh Small Business Success Program
4030 Wake Forest Road, Suite 205
Raleigh, NC 27609
919.807.8400
www.rada-nc.com/
Optimum Capital Funding
Optimum Capital Funding is a business lending platform specializing in providing commercial loans and
funding solutions for small businesses and mid-size companies.
In the new economy, many companies have difficulty finding the funding necessary for startup or
growth. That’s why Optimum Capital Funding built a network of lenders and funding sources that
understand that solid opportunities exist for small businesses and mid-size companies – if they have
the necessary financial backing.
Led by veteran financial and business professionals who believe in the exceptional capabilities of small
and medium size businesses to launch and thrive in the new economy, Optimum Capital Funding
focuses on providing capital to assist these companies in building solid and successful futures.
Optimum Capital Funding
206 Merrimon Ave., Suite 210
Asheville, NC 28801
855-311-3612 toll-free|828-239-0031 office
www.optimumcapitalfunding.com
ONLINE RESOURCES
Loan Matching Sites
Loan matching sites are online services that take information and attempts to match businesses with
multiple potential lenders. Two of the larger loan matching sites are BoeFly and Lendio. While these
sites provide borrowers with the ability to been seen by multiple lenders quickly after completing one
application, it’s important to remember that these are still traditional lenders with strict requirements,
and individuals must still apply with individual lenders that express interest. In some cases sites may
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connect businesses with brokers and not lenders. For start-up businesses, franchises are the most likely
to find some success via loan matching sites.
Peer-to-Peer Lending (P2P)
Peer-to-peer lending, in which groups of individuals make loans to entrepreneurs through
matchmaking web sites such as Lending Club and Prosper, has gained significant popularity in the last
few years. Most peer-to-peer loans are unsecured personal loans, largely based on personal credit
scores, with a maximum loan amount of $35,000.
The lending intermediaries are for-profit businesses; they generate revenue by collecting a one-
time fee on funded loans from borrowers and by assessing a loan servicing fee to investors
(either a fixed amount annually or a percentage of the loan amount).
Does it cost more to borrow from nontraditional lenders? Often, yes. At Lending Club, for instance,
interest rates range from 6 – 26%, based on an assessment of risk and volatility
.
Peer-to-peer lending
may be useful when small amounts of funds are needed, and banks are not interested in investing at
that level.
Peer-to-Peer Lending Sites
ACCION USA
115 East 23rd Street, 7th Floor
New York, NY 10010
212.387.0377
[email protected]
www.accionusa.org/default.aspx
GlobeFunder Ventures, Inc.
271-A West Centre #211
Portage, MI 49024
888.870.1304
www.globefunder.com
Lending Club
71 Stevenson, Suite 300
San Fransisco, CA 94105
866.754.4094
www.lendingclub.com/home.action
Prosper Marketplace, Inc.
111 Sutter Street, 22nd Floor
San Francisco, CA 94104
866.615.6319
www.prosper.com
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Short Term Business Loans
Some newer web sites are offering short term business loans based on overall business health, and not
just credit scores. One such site, On Deck (www.ondeckcapital.com), offers loans of $25,000 –
250,000 for periods of 3 – 18 months that are repaid through daily debits from the business bank
account (equal daily payments over business days). Requirements include being in business for 1 year
(so no start-ups), annual revenue of over $100,000, and a personal credit score of 500 or more. Their
average loan is a 6 month term with 15% simple interest (APR higher).
PayPal has begun offering short term loans to borrowers selling exclusively through the Internet and
currently managing their revenues via a PayPal account.
Kabbage.com provides advances to help underwrite inventory for eBay, Amazon Marketplace and other
auction sellers.
What most online options have in common is that they are considerably more expensive than bank
loans, and sometimes have terms that are harder to understand. When considering these sources,
make sure to check ratings, get references, and understand the terms and conditions.
Also see Crowdfunding in the Equity Capital chapter on page 117.
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CHAPTER 8: FINANCIAL ASSISTANCE SERVICES
NC Small Business and Technology Development Center
(SBTDC)
The North Carolina Small Business and Technology Development Center (SBTDC) is a business advisory
service of the University of North Carolina System, administered by NC State University, and operated
in partnership with the U.S. Small Business Administration. The SBTDC is also a strategic partner of the
North Carolina Department of Commerce.
The primary focus of the SBTDC is to provide management counseling and educational services to help
North Carolina businesses meet challenges, manage change, and plan for the future. SBTDC specialists
assist small and mid-sized businesses throughout North Carolina from 16 offices across the state –
each affiliated with a college or university. The SBTDC’s core mission is to help North Carolina
businesses grow and create new jobs to benefit all North Carolinians. Most SBTDC services are free of
charge, and all services are confidential.
For further information, visit www.sbtdc.org.
The SBTDC’s General Business Services are well-defined and are designed to meet its clients' needs:
Management Counseling — SBTDC counselors help business owners and managers with financing,
marketing, human resources, operations, business planning, and feasibility assessment. In 2012, the
SBTDC helped clients access over $107 million in financing.
Management Education — The SBTDC also provides targeted, research-based educational products
that are focused on change management, strategic performance, and leadership development for
management teams, employees, and board members.
The SBTDC’s Market Development Services are specifically designed to aid growing companies in
expanding their markets and increasing competitiveness:
Marketing & Research Services — SBTDC specialists provide research and marketing support services
for SBTDC clients, primary research on small business needs and economic impact, and special projects
such as small business incubator feasibility studies.
Government Procurement (PTAC) — SBTDC procurement specialists help businesses secure contracts
by providing comprehensive assistance in selling North Carolina products and services to federal, state,
and local governments. In 2012, the SBTDC helped small businesses in-state obtain more than $119
million in government contracts.
International Business Development — SBTDC helps small to midsized companies with the business
side of exporting, and is North Carolina’s City-State Partner for the US Export-Import Bank.
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Technology Development and Commercialization – SBTDC technology specialists assist technology-
based businesses to commercialize innovative technology. North Carolina’s high-tech businesses
received a total of $56 million dollars in SBIR/STTR funding in 2011.
State Headquarters at NCSU
5 West Hargett St., Suite 600
Raleigh, NC 27601
919.715.7272
[email protected]
www.sbtdc.org
Regional Offices
SBTDC at Western Carolina University
Asheville Office, 46 Haywood St, Ste 212
Asheville, NC 28801
828.251.6025
www.sbtdc.org/wcu
SBTDC at Appalachian State University
130 Poplar Grove Rd
Boone, NC 28608-2114
828.262.2492
www.sbtdc.org/asu
SBTDC at UNC Chapel Hill
1700 Martin Luther King Blvd.,
Suite 115, CB# 1823
Chapel Hill, NC 27599-1823
919.962.0389 or 800.815.8906
www.sbtdc.org/uncch
SBTDC at UNC Charlotte
The Ben Craig Center
8701 Mallard Creek Rd.
Charlotte, NC 28262-9705
704.548.1090
www.sbtdc.org/uncc
SBTDC at Western Carolina University
WCU School of Business, 226 Forsyth Bldg.
Cullowhee, NC 28723-9646
www.sbtdc.org/wcu
SBTDC at NC Central University
G08 Willis Building / 1801 Fayetteville Street
Durham, NC 27707
919.530.7386
www.sbtdc.org/nccu
SBTDC at Elizabeth City State University
K. E. White Graduate Center
1704 Weeksville Rd., Box 874
Elizabeth City, NC 27909-7806
252.335.3247
www.sbtdc.org/ecsu
SBTDC at Fayetteville State University
1200 Murchison Road / POB 1334
Fayetteville, NC 28302-1334
910.672.1727
www.sbtdc.org/fsu
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SBTDC at NC A&T State University
Nussbaum Entrepreneurial Center
2007 Yanceyville St., Suite 303
Greensboro, NC 27405
336.334.7005 | 828.227.3504
www.sbtdc.org/ncat-uncg
SBTDC at UNC Greensboro
POB 2617
1111 Spring Garden Street
Suite 3708
Greensboro, NC 27402
336.334.5724
www.sbtdc.org/ncat-uncg
SBTDC at East Carolina University
300 East First St.,Willis Building
Greenville, NC 27858-4353
252.737.1835
www.sbtdc.org/ecu
SBTDC at Appalachian State Univ.
Hickory Office
1990 Main Ave SE
Hickory, NC 28602
828.345.1110
www.sbtdc.org/asu
SBTDC at UNC Pembroke
POB 1510
115 Livermore Dr.
Pembroke, NC 28372-1510
910.775.4000
www.sbtdc.org/uncp
SBTDC at NCSU
5 West Hargett Street, Suite 1010
Raleigh, NC 27601
919.600.5999
www.sbtdc.org/ncsu
SBTDC at UNC-Wilmington
601 South College Road, SB 110
Wilmington, NC 28403
910.962.3744
www.sbtdc.org/uncw
SBTDC at Winston-Salem State University
301 North Main Street
9
th
Floor of Winston Towers, POB 19483
Winston-Salem, NC 27110-0001
336.750.2030
www.sbtdc.org/wssu
doc_656622058.pdf
A Guide to Financial Resources for Small Business in North Carolina
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CAP I TA L OP POR TUNI T I E S FOR SMAL L BUS I NE SS E S
`
FOR SMALL BUSI NESSES
Prepared by the Small Business & Technology Development Center
A Gui de to Fi nanci al Resources
for Smal l Busi ness i n North Carol i na
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
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© 2013 by The University of North Carolina’s
Small Business and Technology Development Center (SBTDC)
5 West Hargett Street, Suite 600, Raleigh, NC 27601
phone: 919.715.7272
e-mail: [email protected]
website: www.sbtdc.org
All rights reserved.
No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording, or otherwise – without the prior
written permission of the publisher.
This material is based upon work supported by the US Small Business
Administration (SBA). Any opinions, findings, conclusions, or
recommendations expressed in this publication are those of the author
and do not necessarily reflect the views of the SBA.
The SBTDC would like to thank the following
for their valuable contributions to this guide:
Ashleigh Cates
Pete Donahue
Angela Farrior
Tim Janke
Eileen Joyce
Karen Hoskins
George McAllister
Bethany Sampson Morgan
David Morgan
Lisa Ruckdeschel
FEEDBACK
If you have any suggestions or questions about this guide,
please call 919. 715-7272 or e-mail [email protected].
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
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TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION ....................................................................................................................... 11
Purpose of this Guide ........................................................................................................................................ 11
CHAPTER 2: OVERVIEW OF FINANCING RESOURCES .................................................................................... 13
Getting Started .................................................................................................................................................. 13
Start-Up (or “Seed”) Stage ................................................................................................................................ 13
Personal Assets ............................................................................................................................................. 14
Family and Friends ........................................................................................................................................ 14
Home Equity Loans or Credit Lines ................................................................................................................ 14
Growth Phase .................................................................................................................................................... 15
Internal Financing .......................................................................................................................................... 15
Cash Management Tools ............................................................................................................... 15
Accounts Receivable Management................................................................................................ 15
Inventory Control .......................................................................................................................... 15
Electronic Commerce..................................................................................................................... 16
Barter ............................................................................................................................................. 16
External Financing ......................................................................................................................................... 16
Short-term Financing ..................................................................................................................... 17
Long-term Financing ...................................................................................................................... 18
Debt Financing ............................................................................................................................... 18
Equity Financing ............................................................................................................................ 18
Debt Financing vs. Equity Financing ............................................................................................... 19
Debt-to-Equity Ratio ...................................................................................................................... 19
Grants ............................................................................................................................................ 22
CHAPTER 3: FINANCIAL INSTITUTIONS ........................................................................................................ 23
Commercial Banks ............................................................................................................................................. 23
Savings Institutions............................................................................................................................................ 24
Non-Bank Lenders ............................................................................................................................................. 24
Asset-Based Lenders...................................................................................................................................... 24
Purchase order financing ............................................................................................................... 25
Specialized Asset-Based Lenders ................................................................................................... 26
Factors or Factoring Companies .................................................................................................... 26
Leasing Companies ........................................................................................................................ 28
Credit Unions ..................................................................................................................................................... 30
Community Development Credit Unions (CDCUs) or Community Development Corporations
(CDCs) ............................................................................................................................................ 32
Veteran Direct Loan Program ........................................................................................................ 32
North Carolina Minority Support Center ........................................................................................................... 32
CHAPTER 4: FEDERAL GOVERNMENT SOURCES ........................................................................................... 33
U.S. Small Business Administration (SBA) ......................................................................................................... 33
7(a) Loan Guaranty Program ......................................................................................................................... 34
Restrictions on Eligibility of Businesses ......................................................................................................... 35
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Loan Maturities ............................................................................................................................................. 36
Interest Rates and Fees ................................................................................................................................. 36
SBA 7(a) Programs ........................................................................................................................................ 36
The Preferred Lenders Program (PLP) ........................................................................................... 36
SBA Express Program ..................................................................................................................... 37
SBA Patriot Express Loan ............................................................................................................... 37
SBA Military Reservists Economic Injury Loans .............................................................................. 37
EXPORT FINANCING ...................................................................................................................................... 38
Export Express Loan Program ........................................................................................................ 38
The Export Working Capital Guarantee Program........................................................................... 38
The International Trade Loan Program .......................................................................................... 38
SBA Community Advantage Program ........................................................................................................... 39
Short-term Loans and Revolving Lines of Credit (CAPLines) ......................................................................... 40
Community Adjustment & Investment Program (CAIP) ................................................................................ 40
Pollution Control Loan ................................................................................................................................... 40
Defense Loan and Technical Assistance Program (DELTA)............................................................................ 41
SBA Micro Loans and Other Lending Programs ............................................................................................ 41
SBA Microloan Program ................................................................................................................. 41
SBA Intermediary Lending Pilot in North Carolina - The Support Center and NCEED ................................... 42
SBA Small Loan Advantage Program ............................................................................................................ 42
504 Certified Development Company Program ............................................................................................. 43
SBA Surety Bond Program ............................................................................................................................. 45
Small Business Investment Company (SBIC) Program ................................................................................... 45
Small Business Innovation Research (SBIR) / Small Business Technology Transfer (STTR) Programs ........... 47
Small Business Innovation Research (SBIR) ................................................................................... 47
Small Business Technology Transfer (STTR) ................................................................................... 49
Differences between SBIR and STTR .............................................................................................. 50
8(a) Program ................................................................................................................................................. 52
U.S. Department of Commerce .......................................................................................................................... 52
Economic Development Administration (EDA) .............................................................................................. 52
Revolving Loan Fund (RLF) ............................................................................................................. 52
Public Works and Economic Development Assistance................................................................... 53
Economic Adjustment Assistance .................................................................................................. 53
Economic Development Planning Assistance ................................................................................ 53
University Center Economic Development .................................................................................... 54
Research and Development ........................................................................................................... 54
Trade Adjustment Assistance for Firms (TAAF) Program ............................................................... 54
U.S. Department of Agriculture (USDA) ........................................................................................................ 56
Farm Service Agency ...................................................................................................................... 56
U.S. Department of Transportation (DOT) ..................................................................................................... 56
US Department of Transportation Short-Term Lending Program .................................................. 56
Rural Development Programs ............................................................................................................................ 57
Business and Industrial Loan Program .......................................................................................................... 57
Intermediary Re-lending Program (IRP) ......................................................................................................... 57
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Rural Business Investment Program (RBIP) ................................................................................................... 58
Rural Lender Advantage ................................................................................................................................ 58
B&I Guaranteed Loan Program ...................................................................................................... 58
USDA Rural Development .............................................................................................................................. 59
Area Offices ................................................................................................................................... 60
Rural Business Enterprise Grants ................................................................................................... 61
U.S. Department of Energy ................................................................................................................................ 61
Financial Opportunities for Inventors ............................................................................................................ 61
Basic Energy Sciences .................................................................................................................................... 62
CHAPTER 5: STATE GOVERNMENT SOURCES ............................................................................................... 67
NC Department of Commerce ........................................................................................................................... 67
Commerce Finance Center ............................................................................................................................ 67
Community Development Block Grant (CDBG) Program ............................................................... 67
Industrial Development Fund (IDF) ................................................................................................ 67
Job Development Investment Grants ............................................................................................ 68
Shell Building Program ................................................................................................................... 69
Industrial Revenue Bond (IRB) Program ........................................................................................ 69
NC Board of Science and Technology ................................................................................................................ 70
One N.C. Small Business Program ................................................................................................................. 70
Energy R&D Cost-Sharing Program ............................................................................................................... 71
Green Business Fund ..................................................................................................................................... 71
NC Qualified Investment Tax Credit .............................................................................................................. 71
Technology Development (R&D) Tax Credit .................................................................................................. 74
One North Carolina Fund .............................................................................................................................. 75
Credit for Worker Training............................................................................................................................. 75
Credit for Investing in Central Office or Aircraft Facility Property ................................................................. 76
Credit for Substantial Investment in other Property ...................................................................................... 76
Other Tax Credits and Incentives for Businesses ........................................................................................... 76
North Carolina Ports Tax Credit .................................................................................................................... 77
NC Agricultural Finance Authority................................................................................................................. 77
Farm Ownership Loan Program ..................................................................................................... 77
Agribusiness Loan Program ........................................................................................................... 77
Agricultural Development Bonds ................................................................................................... 77
Renewable Energy Property Tax Credits ........................................................................................ 78
NC Community College System ......................................................................................................................... 79
Economic & Workforce Development Services – Industry Training Program ................................................ 79
CHAPTER 6: EQUITY CAPITAL SOURCES ...................................................................................................... 81
Equity Funding “Food Chain” ........................................................................................................................... 81
Individual Investors (Angel Capital) .............................................................................................................. 83
Angel Funds and Networks ........................................................................................................................... 84
Venture Capital ............................................................................................................................................. 86
Stages of VC Financing ................................................................................................................... 87
Raising Venture Capital.................................................................................................................. 88
QuestMark Partners, LP ................................................................................................................................... 113
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Securities Offerings...................................................................................................................................... 115
Regulation D (Rule 504) ............................................................................................................... 115
Small Corporate Offering Registration (SCOR) ............................................................................. 115
Initial Public Offering (IPO) .......................................................................................................... 116
Joint Ventures and Strategic Alliances ......................................................................................... 117
Crowdfunding .............................................................................................................................. 118
CHAPTER 7: PRIVATE, NOT-FOR-PROFIT AND LOCAL PROGRAMS .............................................................. 119
NC Biotechnology Center (NCBC) .................................................................................................................... 119
Company Inception Loan ............................................................................................................................. 120
Small Business Research Loan Program (SRL) ............................................................................................. 120
Strategic Growth Loan (SGL) ....................................................................................................................... 120
Technology Enhancement Grant (TEG)........................................................................................................ 120
Business Acceleration and Technology Out-licensing Network (BATON) ................................................... 120
Business Development Loan Program ......................................................................................................... 121
Collaborative Funding Grant (CFG) Program .............................................................................................. 121
Small Business Innovation Research (SBIR) Bridge Loan............................................................................. 121
Entrepreneur Focused Support Groups, Councils and Networks ..................................................................... 122
NC Rural Economic Development Center .................................................................................................... 122
Microenterprise Loan Program .................................................................................................... 123
NC REAL Enterprises ........................................................................................................................................ 124
Defense Ventures Fund ............................................................................................................... 124
North Carolina Capital Access Program ....................................................................................... 125
North Carolina Rural Economic Development Center...................................................................................... 125
Clean Water Partners Program .................................................................................................... 125
Economic Infrastructure Program ............................................................................................... 126
Building Reuse and Restoration Grants ....................................................................................... 126
Rural Hope (Rural Health Care Initiative) ..................................................................................... 126
Rural Community Mobilization Project ........................................................................................ 126
Economic Innovation Grants Program ......................................................................................... 127
Project GATE (Growing America Through Entrepreneurship) ...................................................... 127
New Generation Ventures ........................................................................................................... 127
N.C. Capital Access Program ........................................................................................................ 128
N.C. Loan Participation Program .................................................................................................. 128
New Generation Leaders ............................................................................................................. 128
Rural Economic Development Institute (REDI) ............................................................................ 128
Child Day Care Loan Guarantee Fund .......................................................................................... 129
Rural Venture Fund...................................................................................................................... 129
NC State Small Business Credit Initiative ..................................................................................... 130
NC IDEA (Innovative Development for Economic Advancement)................................................................ 131
Self-Help – Community Development Financial Institution (CDFI) .............................................................. 131
Special Child Care Business Programs .......................................................................................... 132
Good Work, Inc. .......................................................................................................................................... 133
NC Economic Opportunities Fund / Dogwood Equity .................................................................................. 133
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Business Consortium Fund .......................................................................................................................... 134
Carolinas Minority Supplier Development Council ...................................................................................... 134
Natural Capital Investment Fund (NCIF) ..................................................................................................... 135
The Shade Fund ........................................................................................................................................... 135
Sequoyah Fund ............................................................................................................................................ 136
SlowMoney NC ............................................................................................................................................ 136
The Support Center...................................................................................................................................... 137
The Support Center/Fifth Third Bank Enterprise Loan Fund ........................................................ 137
Local Government Programs ........................................................................................................................... 138
Appalachian Regional Commission ............................................................................................................. 138
Carrboro Revolving Loan Fund .................................................................................................................... 138
Charlotte Communities Within A City (CWAC) Equity Loan Program ......................................................... 139
City of Charlotte – Business Equity Loan Program ...................................................................................... 139
City of Charlotte – Business Enterprise Loan Fund ..................................................................................... 140
City of Charlotte – Façade Improvement Grant Program ............................................................................ 140
City of Winston-Salem – Economic Development Revolving Loan Program ............................................... 141
City of Winston-Salem – Target Area Business Assistance Program ........................................................... 141
MAY Coalition ............................................................................................................................................. 142
Micro-Enterprise Loan Program of Winston-Salem/Forsyth County, Inc. (MELP) ........................................ 142
Raleigh Small Business Success Program .................................................................................................... 143
Optimum Capital Funding ........................................................................................................................... 143
ONLINE RESOURCES.................................................................................................................................... 143
Loan Matching Sites..................................................................................................................... 143
Peer-to-Peer Lending (P2P) ......................................................................................................... 144
Short Term Business Loans .......................................................................................................................... 145
CHAPTER 8: FINANCIAL ASSISTANCE SERVICES ......................................................................................... 147
NC Small Business and Technology Development Center (SBTDC) ................................................................. 147
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CHAPTER 1: INTRODUCTION
Small businesses continue to make important contributions to our national economy. Within the United States,
small businesses, defined by the U.S. Small Business Administration (SBA) as independent firms having fewer
than 500 employees, represent more than 99.7% of all employers, employ more than half of all private sector
employees, and account for 45% of the total U.S. private sector payroll. In addition, small businesses are
significant generators of new jobs, creating 60 to 80% of net new jobs annually. These figures from the SBA
substantiate that small businesses are vital engines for our nation’s economic growth.
1
The North Carolina Small Business and Technology Development Center (SBTDC) publishes this guide in an
effort to support the growth of North Carolina’s economy and to educate and serve the small business
community. The SBTDC is a business and technology extension service of The University of North Carolina,
administered by NC State University and operated in partnership with the U.S. Small Business Administration.
Since 1984, we have provided management counseling and educational services to help make businesses
better.
This guide provides information about financial resources available to small businesses. Ideally, it would include
all sources of funding for small businesses, regardless of the location of the financing entity. Unfortunately, such
an undertaking is beyond the scope of this publication. Therefore, this guide concentrates on sources of capital
located in or actively serving North Carolina. Likewise, the Internet resources cited are illustrative and do not
represent a complete list of all useful materials to be found online.
Purpose of this Guide
This guide is intended to serve as a resource for individuals seeking start-up financing, businesses on the hunt
for expansion capital, and organizations that aid small businesses in obtaining financing. Each funding source is
briefly identified and accompanied by a list of contacts. It is the responsibility of the user to further explore
these resources and carefully review their submission criteria and guidelines. This guide also describes recent
developments that may affect the availability of funding or the eligibility of small businesses to access capital.
The financing sources contained in this guide are grouped into five major categories:
? Financial institutions
? Federal government sources
? State government sources
? Equity capital sources (includes angel and venture capital)
? Private, not-for-profit, and local programs
Each program has certain guidelines, some strictly limiting the availability of funds. It is important to
understand that none of these sources represents “free money.” In fact, some of the programs are quite costly.
The company or individual looking for start-up funding should have a well thought-out, detailed business plan,
including financial projections. Existing businesses will need a plan with both historical and projected financial
information. Only then can the needs of the applicant seeking capital be fully evaluated and met by the investor
or lender. The company’s stage of development, the background and reputation of the management team, the
1
For further information concerning the role of small businesses in our national economy, consult the U.S. SBA’s Advocacy Small
Business Statistics and Research, Frequently Asked Questions www.sba.gov/advo/stats/sbfaq.pdf
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nature of the product or services offered, and market potential will be key factors determining the firm’s ability
to raise capital.
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CHAPTER 2: OVERVIEW OF FINANCING RESOURCES
Getting Started
As a company moves through its life cycle, the sources it uses for capital change. In the early formation phase,
capital is generally raised through sources independent of the operations of the organization. Capital is
acquired chiefly through the personal resources of the owner or his immediate relations, and investor-related
debt. Any cash generated from operations is generally used for setup costs including purchases of inventory and
equipment. This initial phase calls for the use of techniques that maximize- or “stretch”- current funds, such as
seeking longer credit terms from suppliers, procuring advances from customers, subcontracting, and leasing
equipment, among other methods.
As the company grows, it begins to generate capital through its operations, and as it establishes a track record
of profitability, it will have more opportunities to obtain outside financing. Capital needed for expansion may be
available from external sources, including a greater emphasis on debt financing through commercial lenders or
equity financing through private investors and firms. As the company matures, operations generally provide
cash. Mature companies are in a better position to be able to afford the costs of further expansion through
combinations of debt and equity financing, such as private placements or initial public offerings (IPOs).
In all of these phases of business growth, companies must keep abreast of the latest tax credits and other
government incentives as well as grant opportunities. Though it is far more likely that a business will be able to
avoid a tax than obtain “free” grant money, an open mind must be kept toward all sources of potential
funding.
The organizational form of a business is another factor that determines the financing sources that may be
available. A sole proprietorship is often the form used by a small company -- operated by a single individual
(e.g. restaurant, trucking firm, gift shop) with few capital needs that cannot be met from the owner's resources
or conventional lenders. A start-up formed as a limited partnership (LP) may be attractive to investors who can
only be held personally liable up to the amount of their investment made. Neither partnerships nor sole
proprietorships, however, can raise equity financing through a private placement or an IPO. Corporations offer
greater flexibility for raising capital through a mix of debt and equity than do either sole proprietorships or
partnerships. Finally, the limited liability company (LLC) is a fairly new form of organization that combines the
characteristics of both corporations and partnerships.
2
Start-Up (or “Seed”) Stage
External sources of financing refer to those funds not generated by business operations. During the start-up
phase, among the most important sources are personal assets accessible to the owner. The emphasis is on
external sources since the business is not yet generating positive cash flow. In the search for early-stage capital,
loan opportunities are usually limited by the need for collateral and personal guarantees, which serve as
protection to the commercial lender. It is unlikely for most start-up companies to obtain equity investments, in
part due to the high risk involved in this stage of investment. Factors such as a well-developed business plan, or
2
For further information on forms of business organization within North Carolina (including forms, filing fees, and useful how-to guides),
visit the N.C. Secretary of State’s Corporations webpage: www.secretary.state.nc.us/corporations.
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prior experience in the new business’s industry, improve one’s chances of acquiring start-up or early-stage
funding.
Personal Assets
Obtaining financing for a start-up enterprise is difficult because there is no track record on which the business
can be judged. Personal assets are thus the first source of capital that must be considered. A personal stake in
the enterprise shows a commitment to the business and provides lenders with a potential source of collateral to
secure a loan. Most banks require at least a 30 percent personal equity investment in a start-up business and 10
percent to 30 percent in a more established business. If an owner does not have access to sufficient personal
resources to get through the lean times of the start-up phase, it may be wise to re-evaluate the decision of
going into business at this time.
Sources of financing using personal assets (in the pre-seed stage, this is oftentimes referred to as
“bootstrapping” or “bootstrap” funding) include:
? Checking and savings accounts
o good source, if available
? Credit cards
o disadvantage: a credit line can come with a high interest rate
o advantage: only have to pay interest
? Stocks, bonds and other investments
o disadvantage: may face capital gains tax on the sale of investments that have appreciated
over the years
o advantage: no payment
? Retirement funds such as a 401K
o disadvantage: may face a penalty for early withdrawal
Family and Friends
Family and friends can provide direct investment funds, loans, or serve as guarantors on a bank loan if their
credit history and resources are strong. Unlike commercial sources, this group is personally acquainted with the
entrepreneur, and though they must still be objective in assessing the proposal, intangibles such as personal
character are often given more weight by family and friends than by more traditional sources. If an outright loan
is not possible, this group can still provide aid in procuring financing through credit enhancement. Credit
enhancements are assets of recognized value that can be borrowed to support a loan or other debt obligation.
This technique bolsters the asset base so that additional debt financing can be acquired. This can be
accomplished through the pledge of personal assets such as a CD, stocks, or bonds as collateral.
Home Equity Loans or Credit Lines
Home equity loans (sometimes referred to as a “second mortgage”, though it may in fact constitute a third or
even fourth lien on the collateral property) and equity lines of credit can be a source of funding for a small
business. The feasibility of this source will vary with the amount of equity that has been built up in the home. It
can usually be obtained through a bank, a mortgage company, a finance company specializing in secondary
funding, or a savings-and-loan (S&L) association. There are usually points or fees and closing costs (and
sometimes other factors, such as balloon payments) to be considered when assessing the costs of this mode of
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financing. The proceeds from the loan can either be used as a source of direct financing or as collateral to
secure a credit line.
Growth Phase
Internal Financing
Cash Management Tools
Effective cash management of a business is one of the best ways to raise capital, and it also helps avoid paying
interest on unnecessary external debt. Since short-term cash flow needs are vital to company operations,
available cash flow management techniques must be maximized. Small business banking services are
traditionally oriented around deposits and loans, with most services tied to checking accounts. However,
specialized services once used primarily by larger companies are now available to smaller businesses. The
following services can be used as part of an efficient cash management program:
a. Lockbox: An integral part of a profitable business is a fast, efficient accounts receivable process. A lockbox
is a post office box maintained by the bank to receive payments made to a business. The bank empties the
lockbox frequently and immediately deposits checks into your account. The advantage is that funds become
available much faster than if they are first sent to the place of business.
b. b. Controlled Disbursement Account: This tool enables the business to make timely payments while
maintaining the maximum earning power of funds. With a controlled disbursement account, the business
receives daily notification of the checks that will clear the account that day. Only the amount needed to
cover those checks is transferred to the checking account, ensuring that no idle cash remains in the account.
c. Sweep Account: A sweep account is an automatic system to move excess money into an interest-bearing
account every night. After all debits and credits are posted to the checking account at the end of the day,
funds in that account are automatically swept into a money market or savings account.
Accounts Receivable Management
Effective short-term cash flow management is vital to a company’s operations. Short-term financing needs are
decreased when cash flow is maximized through matching accounts receivable with accounts payable. This is
done by carefully negotiating and managing credit terms with customers and suppliers. Periods where payables
exceed receivables must be handled through short-term financing such as a line of credit. If the business itself
delays sending bills, the result is a longer period before payment is received. The use of that cash to cover
payables or for investment is lost over that period. The same is true when the collection cycle is lengthened as a
result of a failure of customers to pay according to the credit terms. Consider using discounts to encourage
timely customer payment.
Inventory Control
The less excess inventory carried, the greater the availability of funds for interest-bearing accounts or working
capital purposes. Excess inventory lowers a company’s profitability due to the money spent to produce or
purchase the idle goods that take up warehouse space and increase insurance costs. The goal of avoiding
excess inventory must be balanced with a company’s ability to consolidate inventory purchases to take
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advantage of volume pricing. Implementing an inventory control system can help reduce excess inventory and
its associated costs.
Electronic Commerce
Each of the preceding strategies for effective internal financing may be enhanced through the use of electronic
commerce. Electronic commerce, mostly in the form of Electronic Data Interchange (EDI), has been around since
the 1950s but until recently was primarily used by large companies doing business with the federal government
over expensive private networks. Technological advancement and the increased accessibility of both personal
computers and the Internet have made electronic commerce an increasingly popular and more affordable tool
for small businesses. For many individuals and small businesses, some aspects of electronic commerce are a
part of daily life—for example, direct deposit of payroll, credit card validations, and automatic bill paying.
Electronic commerce allows the computer-to-computer exchange of routine business information between a
company and its suppliers, its customers, banks, and other trading partners. One aspect of such an exchange
that offers an important financing opportunity to small businesses is the ability, through either EDI or the
Internet, to establish a partner-like relationship with their suppliers. Suppliers are then able to manage their
customers’ material logistics, including a customer’s on-hand inventory. The supplier’s goods may be moved on
consignment and/or the small business customer may not be expected to pay in full until the goods are used or,
in the case of manufacturing components, until the final product has been sold. In this way, the supplier
provides a portion of the working capital for the small business.
Procurement cards are another aspect of electronic commerce that offers significant cost-cutting potential to the
small business. A procurement (or purchasing) card is a specialized corporate credit card that can be customized
to limit dollar amounts and types of purchases that can be made by individual employees. Since banks replace
the vendor in the task of customer billing and collection, for a small business the ability to handle procurement
card transactions could mean both improved cash flow and significant cost savings.
Barter
Bartering is the trading of one item for another. Commercial trade exchanges serve as the mechanism for the
transfer. Through the use of computers, exchanges can match the needs and wants of its clients. Barter is a
good way to keep a business moving when cash is scarce. It is especially useful for a small business because it
allows the business to trade unused or excess inventory in exchange for goods and services for which the
business would otherwise have to pay. The resulting benefit to a business is that it cuts costs and eases cash
flow. Trades are normally made at full retail value with a 10 percent commission paid to the exchange. The
goods or services received are also considered as income for tax purposes. Among the larger exchanges
operating in North Carolina are International Barter Group (IBG) (843.824.1435) and ITEX BarterWorks
(www.itex.com )( 919.870.9226). For more information on bartering please visit the International Reciprocal
Trade Association at www.irta.com.
External Financing
As the business begins to grow, external financing sources should become more available, and debt or equity
may be used to satisfy financing needs. The mix of financing sources varies depending on the growth stage of
the business. During the start-up stage, entrepreneurs most often rely on “family and friends” and internal debt
financing, but as the business becomes more established, it develops a credit history and outside debt financing
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
becomes more available. High-growth companies- those growing very quickly- are attractive to equity financers.
Equity financing providers may be companies, funds, or individuals, but they all seek to invest in private
companies in which they can anticipate a substantial rate of return for their investment. Debt financing is more
varied, both in the types of entities that provide such financing and in the types of financing available.
Short-term Financing
Short-term financing is used to address needs of one year or less in duration and is intended to take care of a
mismatch in cash flow generated from receivables and expended as payables. It is used to satisfy a business’s
working capital needs and to support investments in short-lived assets such as inventory and accounts
receivable. A working capital deficit indicates that a company has more short-term obligations (i.e., payables)
than short-term assets (i.e., cash, accounts receivable, inventory). The gap can be bridged through accessing
short-term financing (e.g., a revolving credit line).
The most common situation that challenges a company’s ability to repay its debt on a timely basis is using
short-term borrowing for long-term needs. This includes financing expenditures for fixed assets or intangibles
with short-term credit. Though most banks may be reluctant, refinancing short-term borrowings into long-term
debt typically resolves this problem. Balance sheet management is a key factor in determining the right type of
borrowing to utilize at the current stage of development.
a. Trade Credit: Accounts payable -- also called ‘trade credit’- is a form of money management that is
especially crucial for small firms. A business may finance itself by asking its vendors and suppliers to accept
a comfortable payment schedule instead of insisting on full payment at the time of delivery. A flexible
vendor can sometimes be a great solution to both the business and vendor. A business will seek to pay off
its debts over many months (without the penalty of interest charges) while collecting payments from its
customers in full and vendors will not be forced to take back its inventory and still ultimately get paid. This
system also keeps the maximum amount of cash under the business’s control, which can be very
advantages for new smaller businesses.
b. Term Loan: Commercial lenders are a key source of loans. A single loan obtained from a commercial lender
by a business firm is not much different from a loan obtained by an individual. Commercial term loans are
direct business loans with a maturity of five or fewer years. A major advantage of the term loan is that it
assures the borrower of the use of the funds for an extended period. The interest rate on term loans varies
with the level of prevailing rates, the size of the loan, and the quality of the borrower, and it may be fixed
for the life of the loan or it may vary. Repayment of principal and interest is made in a lump sum at
maturity or in installments throughout the life of the loan. Most term loans are installment loans repayable
on an amortized basis, which allows the loan to be repaid gradually over its life rather than have it due in
total at maturity.
c. Line of Credit: A line of credit is a formal or informal understanding between the bank and the borrower
concerning the maximum loan balance the bank will allow the borrower. This source is useful for short-
term financing of working capital, seasonal needs, and unplanned expenses. The amount of the credit line
is often linked to a percentage of a firm’s short-term assets. In most cases, the line of credit must be paid
off in full every 12 months.
d. Letter of Credit: A letter of credit is a financial instrument issued by a bank to provide a credit guarantee to
an outside supplier. The purpose is to guarantee that, if all terms and conditions of the letter of credit are
met, the seller will receive payment from the bank even if the buyer defaults on payment. The risk of the
18
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
buyer defaulting on payments is, therefore, transferred from the supplier to the bank. These are often hard
to obtain from a financial institute due to risk.
Long-term Financing
Long-term financing is general considered anything beyond twelve months and is generally used for investment
in long-lived assets. Long-term needs can be met by debt or equity financing or a combination of the two.
Debt Financing
Debt obligates the business to repay its lenders the debt principal along with a specified rate of interest. The
lender does not acquire an ownership interest in the organization, as would be common with equity financing.
When a business becomes insolvent, creditors or debt holders are entitled to payment before equity
shareholders. Interest payments on the debt by a corporation are tax deductible; dividend payments are not.
The lender looks closely at the borrower’s net worth, generally net worth is current assets minus liabilities,
because that amount is the main source of repayment.
Debt financing entails borrowing either at a fixed or a variable rate. A fixed rate offers certainty, but variable
rates are usually lower than fixed rates at the time the loan is extended and may decrease further if interest
rates fall. In general, if interest rates rise, so will the variable rate and higher monthly payments will result.
Some of the variable rate loans may be capped so as to guarantee not being raised above a certain rate.
Issues to consider regarding the use or pursuit of debt financing include:
? Businesses that cannot satisfy collateral requirements generally don’t qualify
? Risk of high leveraging
? Increasing risk during business cycle downturns since debt payments remain fixed
? Only the interest portion of the debt is tax deductible.
Equity Financing
A business owner may choose equity financing by selling part of the business to individuals, firms, or the public.
A corporation can issue shares of stock as a form of financing. Shareholders pay the corporation for their shares,
and each share represents an ownership interest in the corporation. Shareholders then acquire rights to
dividends and to a portion of the corporate assets on liquidation. There are two basic forms of equity financing:
common and preferred stock. Common stock represents the corporation's residual ownership interest. This is
what is left over after all other claims of creditors, debt holders, and preferred shareholders are satisfied.
Preferred stock has characteristics of both debt and common stock. Like debt, preferred stock earns a fixed
amount of income, in this case called dividends. Preferred stock shareholders have priority over common stock
shareholders as to dividends. Like common stock, it ranks behind the claims of debt holders and creditors in the
event of liquidation.
Issues to consider regarding the use of equity financing include:
? Owner must relinquish percentage of ownership for equity capital
? Equity investors fall behind debt holders in the event of liquidation
? Costs of preparing and placing private offerings can be relatively high
? Dividends may be subject to double taxation
19
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Debt Financing vs. Equity Financing
Consider the case of an entrepreneur who needs $150,000 to start a new corporation. For the purposes of the
illustration, assume this founder contributes $50,000 and the remaining $100,000 is financed with debt. At the
end of the first year, suppose the company has a net income of $100,000. Assume this $100,000 is used to pay
off the original debt. The founder is still the only equity holder, with $150,000 of equity on the balance sheet,
and the liability (debt) formerly held against the business has now been paid off. Since there are no additional
liabilities, all additional earnings can go towards operating expenses and/or assets for the company. Conversely,
if the business lost $100,000 after the first year, this loss would decrease the equity portion of the balance sheet
to negative $50,000 and the loan must still be paid. The company will likely have difficulty making these
payments and may be in danger of defaulting. As this illustrates, debt financing provides leverage to the
business owner and amplifies the impact of earnings as well as losses. In a second case, assume the company
obtains $150,000 of equity financing, with no debt financing, and has the same first-year net income of
$100,000. Unlike the first case, the equity position will increase to $250,000 and there is no debt to pay.
Conversely, if the company suffers a loss of $100,000 in the first year, this loss would decrease the equity
portion of the balance sheet to $50,000.
Debt-to-Equity Ratio
The analysis of the amount of debt financing used as compared to equity financing is referred to as the debt-to-
equity ratio. The ratio of total debt to equity provides an indication of how strong a company’s finances are by
comparing what it owes to what it owns. Potential lenders or investors use this ratio to evaluate risk: the higher
the equity in the firm’s capital structure- compared to the debt- the less risk the company appears to present to
a lender. For further information on debt, equity, and other financing basics visit the SBA’s Financing Your
Business webpage at www.sba.gov/financing/.
20
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
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21
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Obtaining a Loan
The most important aspect to realize in seeking a loan as a source of capital is that the lending institution
derives its return solely based on the borrower’s ability to repay the principal and interest. Since a lender’s
expected return on investment is limited to interest payments and service fees, it will be reluctant to accept as
high a degree of risk as may be acceptable to an investor who provides financing in exchange for a claim on
future earnings of the company.
The lender does not gain any additional return if the business does exceedingly well. One must also realize,
however, that these institutions principally derive revenue from making loans. A loan applicant, therefore, must
take the time to gain an understanding of what the lending institution looks for in a loan candidate and why
the business opportunity is a solid proposition for the bank.
Before approaching a financial institution, the applicant needs to have the following documents:
? A business plan
? Federal tax returns for the previous three years
? Personal and business financial statements
? Cash flow statements.
A business plan is the first indication of how the business is going to be managed. A business plan is often one
of the most important documents and can be seen as a sales tool directed at those people who are considering
backing the entrepreneur. If it is thorough and well prepared, this is a predictor that the business will be
managed the same way. The business plan should be sufficiently complete to prove the ability of management
to understand the critical factors of the business such as product, market demand, competition, cost structure,
pricing, and management.
Information needed to support a loan request includes:
? Size of the loan requested or needed
? Capital already on hand
? Experience of management
? What the loan proceeds will be used for
? How the loan will improve the business
? Evidence of ability to repay the loan.
Factors an applicant must consider in seeking a loan include types of loans offered, rates and fees, collateral
requirements, personal guarantee requirements, lending limits, and loan processing time. While the institution
will have a policy regarding these elements, its flexibility will depend on the strength of the applicant. From the
institution’s point of view, personal credit and payment history are some of the factors indicating the degree of
risk involved in making the loan. The more accounts and services an individual has with the institution --
personal and business checking account, savings account, credit card, IRA -- the more valuable they are to the
bank. This gives the individual more leverage in negotiating terms and conditions of the loan.
It is important for a small firm seeking loan capital to develop a relationship with the lender early in the
process. Even before the loan is needed, it is important to take steps to solidify the foundation for a good
22
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
working relationship. Once the loan is made, it is important to remain in close contact with the bank. If
problems arise, the bank will want to help the company in order to avoid having a bad loan in its portfolio.
Grants
Generally speaking, grants given to business start-ups are very rare. An exception may be for a high technology
business or for businesses producing products that can be used by certain agencies or departments involved in
our nation's defense. Also, non-profit businesses are sometimes eligible for grants. For the most part, these
grants are very specialized. In addition, many Government grants are not available year-round. That is, you
can't apply for most of them at any time you please -- in general, you can apply for them only when they are
announced by a Government agency.
Grant information can be found at your local library in the business section or by visiting the following websites:
1. Grants.gov: the electronic storefront for Federal grants -- www.grants.gov
2. SBA Note on Grants – www.sba.gov/category/navigation-structure/loans-grants/grants
23
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
CHAPTER 3: FINANCIAL INSTITUTIONS
Commercial Banks
Commercial banks are usually one of the least expensive providers of loan capital and among the largest
sources of credit to small businesses. This source of financing will be most helpful for a business that has
demonstrated it can operate profitably. Banks are most interested in financing firms that can show an ability to
repay the loan. This usually means a company must have a strong positive cash flow or assets as collateral that
can be easily liquidated. The evaluation will consist of a detailed analysis of the company’s income statement,
balance sheet, and cash flow statement. Factors such as the content of the business plan and experience of the
management are also considered. If a business has no consistent operating history or cannot demonstrate that
funds will be available to repay the loan, it may be difficult to procure financing using this method.
Payment terms from commercial banks are usually up to five years until maturity but can then be renegotiated
to ten or fifteen years. Most debt is secured, although some unsecured lines may be available. Personal
guarantees are almost always required resulting in exposure of the borrower’s personal assets in the event of a
business failure. Even if the business is formed as a corporation, the limited liability feature is superseded by a
personal guarantee.
The interest rate on a loan is typically expressed as a percentage in excess of the prime rate. Prime is the rate
the nation’s largest banks charge their best customers. The prime rate itself will vary according to economic
conditions; it is primarily dependent on the rate the banks themselves are charged by the Federal Reserve to
borrow money. The percentage over prime that a customer is charged is based on the banker’s perception of
the risk taken by granting the loan.
Prime rates can be found at wsj.com/mdc/public/page/2_3020-moneyrate.html.
Lending institutions have different policies towards risk. Some are inclined to follow relatively conservative
lending practices; others engage in more creative banking practices. Banks borrow money elsewhere at a lower
rate and lend it out at a higher rate; therefore, the commercial bank’s primary concern is a borrower’s ability to
cover principal and interest repayments. Although bankers are interested in all financial aspects of a borrowing
firm, hard assets provide their primary insurance if the business fails.
According to the SBA Office of Advocacy’s 2013 report on small business lending activities, the total number of
small business loans increased from 21.3 million in June 2011 to 23.5 million In June 2012. The full report is
available at www.sba.gov/advocacy/7540/719311.
The North Carolina Banking Commission currently regulates 108 state-chartered, commercial banks and 24
Trust Companies (or Limited Purpose Banks). Since 1994, the SBA Office of Advocacy has ranked the small
business lending behavior of every commercial bank in each state to help depositors and borrowers identify the
small-business-friendly banks in their state. Four factors are used to rank the small business lending activities of
each bank:
? Ratio of small business loans to total assets
? Ratio of small business loans to total business loans
? Dollar value of small business loans
24
CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
? Number of small business loans.
The top North Carolina banks, ranked according to the above criteria and by total small business loans ($120 million
HVP I – Pre-seed fund
HVP III – early-stage
fund
Three Funds:
HVP I: $3 Million
HVP II: $35 Million
HVP III: $83 Million
Life Sciences, Biopharmaceuticals,
Medical Devices, Diagnostics, and related
opportunities in human medicine.
H.I.G. Ventures 1993 >$8.5 billion Seed & Early Stage $5 million - $30 million
Communications, infrastructure, e-
commerce, and Internet software &
services industries.
Idea Fund Partners N/A N/A Seed & Early Stage $100,000 - $750,000
Software, IT Infrastructure, Materials
Technologies, Medical Devices &
Diagnostics
Intel Capital- c/o Intel
Corp.
Early 1990's >$2 billion
Early Stage through
Later Stages
N/A
Internet technologies, wireless &
broadband, hardware & software
applications.
Investments are made to support Intel's
"mission to be the preeminent building
block supplier to the worldwide Internet
economy. Investments support Intel
product initiatives, Intel's new business
thrusts, emerging trends and worldwide
Internet deployment."
Intersouth Partners 1985 $780 million
Seed &
Early Stage
$500,000 to $6 million
Information Technology (networking,
electronics, software); Life Sciences
(biotechnology, genomics, medical
devices, medical services companies).
JAFCO Ventures N/A >$750 million All Stages N/A
Primarily IT sector= Communications;
Internet & Infrastructure; Software;
Systems & Peripherals.
"We have more than 70 Asian
corporate contacts and over 60 Asian
limited partners, and have helped more
than 40 of our portfolio companies
successfully enter the Asian market."
102
CAP I T AL OP P ORT UNI T I ES F OR SMAL L BUS I NES S ES
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
KBL Healthcare
Ventures
1991 N/A
Start-up, Early Stage
& Emerging Growth;
will consider Later
Stage investments
N/A
Life Sciences (biopharmaceuticals, drug
discovery platforms & advanced
materials); Medical devices ("Within the
medical device area, we seek companies
addressing large, unmet medical needs
with demonstrated clinical benefit");
Healthcare services; Medical information
technology.
Kleiner Perkins
Caufield & Byers
1972 $1.5 billion Early Stage N/A
Broadband Equipment & Services;
Consumer Devices & Services; Enterprise
Software & Service; Financial Services;
Internet Infrastructure Software &
Services; Medical Devices/Healthcare
Services/Biotech.
Kodiak Venture
Partners
1999 $681 million Seed & Early Stage $100,000 to $3 million
Communications/IT, Semiconductors,
Software.
Lilly BioVentures N/A N/A Early Stage N/A Biotechnology/Pharmaceuticals.
Prefers to receive business plans via e-
mail.
Lovett Miller & Co.,
Inc.
N/A $175 million
Early Stage, Growth
Capital & Growth
buyouts
typically invests $2 million to $10
million per company, but will
consider smaller & larger
investments
Technology products & services,
Healthcare, Retailing, and other.
MCNC-RDI Seed Fund-
c/o MCNC Ventures,
LLC
2003 N/A
Seed/Start-up & Early
Stage
$50,000 to $500,000
Optical Network Technologies; Network
Security & Encryption; Sensors &
Actuators; Microelectronics &
Microfabrication; Wireless
Infrastructures; Related Biomedical
Applications.
Will consider pre-business plan & pre-
management team opportunities.
MCNC Enterprise
Fund- c/o MCNC
Ventures, LLC
2003 N/A
Early Stage (Will
invest only alongside
select, established VC
firms & funds)
$500,000 to $2 million
Optical Network Technologies; Network
Security & Encryption; Sensors &
Actuators; Microelectronics &
Microfabrication; Wireless
Infrastructures; Related Biomedical
Applications.
PROFILES: VENTURE CAPITAL FUNDS ACTIVE IN NORTH CAROLINA
(as of August 2011)
103
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
MPM Capital-
BioVentures Funds
N/A >$2.1 billion All Stages
historically $7 million to $50
million per company
Life Sciences- primarily in biotechnology
(80%), but also in medical devices (20%)
& biopharmaceuticals.
Advertises itself to be the world's
largest dedicated investor in Life
Sciences.
Massey Burch Capital
Corp.
1994 >$250 million
Early Stage/Start-up
(80%), Later Stage
(20%)
$500,000 to $2 million
Information Technology,
Communications/Internet Solutions, and
Healthcare Services.
Will not consider real estate, oil & gas,
environmental, entertainment, retail
chains or pharmaceuticals.
Mediphase Venture
Partners
N/A N/A Early Stage N/A
Biopharmaceutical technology & Life
Sciences information; occasionally other
areas of life sciences/healthcare.
Meritus Ventures, L.P. 2002 $36 million Expansion stage $250,000 - $2,500,000
The Fund has a broad industry focus that
includes, but is not limited to,
manufacturing, technology, and
software.
The Fund will invest in rural areas in the
Appalachian regions of Ohio, West
Virginia, Virginia, North Carolina, South
Carolina, Georgia, Alabama,
Mississippi, and the entire states of
Arkansas, Kentucky and Tennessee.
Mitsui & Co. Venture
Partners, Inc. (MCVP)
1984 N/A Early Stage
$1 million to $10 million per
company
Information Technology (software,
communications, semiconductors,
electronics, information services, others);
Healthcare (medical devices
(therapeutics/diagnostics),
biopharmaceuticals, drug discovery, drug
discovery tools, others).
"We have provided significant value to
our portfolio companies by leveraging
our experience and business
relationships to develop business
opportunities for them in Japan, China,
and the rest of Asia."
Morgan Stanley
Venture Partners
1985 >$1.1 billion
Later Stage only (no
start-ups)
$5 million to $15 million
Primarily Information Technology
(enterprise software, Internet
infrastructure, communications software
& products, and wireless) and Healthcare
(medical products/devices,
biopharmaceuticals & healthcare IT).
104
CAP I T AL OP P ORT UNI T I ES F OR SMAL L BUS I NES S ES
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Morgenthaler Ventures 1968 $3 billion
All Stages
IT: Expects to invest $5 to $15
million total in each company
over several rounds.
Life Sciences: Expects to invest
between $12 and $20 million
total in a biotech company over
several rounds.
Enterprise IT (enterprise software,
systems & services); Life Sciences
(therapeutic biotech companies, specialty
pharmaceuticals, select biotech tools,
therapeutic medical devices);
Semiconductor & components (optical
networking, wireless communications,
communications semiconductors);
Broadband communications (telecomm
equipment & services).
NC Bioscience
Investment Fund
(NCBIF)- c/o Eno River
Capital, LLC
1998 $26 million Seed & Early Stage $500,000 to $4 million
Life Sciences and Information
Technology.
NCBIF focuses on commercializing
technology developed at North
Carolina's universities and research
institutions.
NC Innovative
Development for
Economic
Advancement (NC
IDEA)
2005 $1.7 Million Early Stage $10,000-$50,000
Information Technology, Medical
Diagnostics, Medical Devices, Material
Sciences, and Green Technologies.
New Enterprise
Associates (NEA)
1978 $11 billion
All Stages, but
primarily interested in
Start-up/Early Stage
$200,000 to $20 million
Information Technology
(communications, software & services,
electronics, semiconductors) and
Healthcare (medical devices, healthcare
services, healthcare information systems
& services, biopharmaceuticals).
New Atlantic Ventures 1999 $117 million Seed & Early Stage $500,000 to $5 million
Exclusively in Information Technology
(communications equipment & software,
enterprise software & services, internet
infrastructure services).
PROFILES: VENTURE CAPITAL FUNDS ACTIVE IN NORTH CAROLINA
(as of August 2011)
105
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Newlight Associates 1997 >$100 million All Stages $1 million to $4 million
Information Technology (esp. software,
specialty semiconductors, Internet
infrastructure, communications, business-
to-business e-commerce).
NextPoint Partners, LP 1990 N/A Seed & Early Stage $250,000 to $4 million
Technology companies, mainly in the
software sector (enterprise software &
related services, telecommunications,
networking, Internet infrastructure,
semiconductors).
Invests primarily in the Mid-Atlantic
region; has recently invested in NC.
Noro-Moseley Partners 1983 $580 million
Seed/Start-up, Early
Stage & Growth
Stage
$3 million to $12 million
Technology (software, web applications,
communications infrastructure
(components & systems or other
hardware), other); Healthcare (services,
life sciences, information technology,
devices); Business Services (outsourcing
(telecom services, human resources, web
services), transaction processing,
financial services).
Different investment criteria and
investment parameters based upon
classification of the company by stage.
To view firm's classification scheme
visit: www.noro-moseley.com/stage.asp
Origin Partners, LP N/A N/A
Early Stage
(primarily), but may
invest in Later Stage
$2 million or less (looks to
invests $3 million to $5 million
total per company and
participate in all future financing
rounds prior to liquidity)
Information Technology,
Communications, Medical Technology
Invests primarily in Northeast U.S. and
Texas, but will invest elsewhere; has
recently invested in NC.
Oxford Bioscience
Partners
1992 $1 Billion
Seed (selective) &
Early Stage
$1 million to $10 million Life Sciences: Bioscience and Healthcare.
Pappas Ventures 1994 >$350 Million Seed to Early Stage $500,000- $5 million
Life Sciences – Biotechnology,
Biopharmaceuticals, Drug Delivery,
Medical Devices & Related Ventures
The largest share of Pappas’ capital is
invested in companies whose lead
products are at the Phase 1 or Phase 2
stage of development.
Piper Jaffray Ventures N/A $5.2 Billion All Stages $3 million to $10 million
Exclusively in Healthcare (medical
technology, biotechnology & healthcare
services).
Firm is an independent subsidiary of
U.S. Bancorp Piper Jaffray.
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CAP I T AL OP P ORT UNI T I ES F OR SMAL L BUS I NES S ES
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Polaris Venture
Partners
1996 >$3 billion Seed & Early Stage N/A
Information Technology (64%) (Internet
& broadband infrastructure, enterprise
software, e-commerce products &
services, network hardware & network
software); Life Sciences/Medical
Technology (36%) (medical devices,
pharmaceuticals, genomics, proteomics,
drug delivery).
Primus Venture
Partners, Inc.
1983 $625 million
All Stages, but
primarily interested in
Growth Stage
$15 million to $40 million overall
investment per company
Software & Services, Media &
Communications, and Healthcare; will
consider others.
Quaker BioVentures,
Inc.
2003 >$700 million All Stages
Initial: $2.5 million to $12 million
Overall investments: $5 to $25
million
Exclusively in Life Sciences
(biopharmaceuticals, medical devices,
human diagnostics, health information
technology, healthcare services).
River Cities Capital
Funds
1994 $400 million
Early to Mid-Stage,
some Later Stage;
generally does not
invest at Seed Stage
? Seed Stage: $15
million
Business Services; Healthcare (healthcare IT,
healthcare services, approved medical
devices); Telecom & Communications (radio
stations, last mile broadband, telecom services
& publishing); Information Technology
Products (software applications, middleware &
tools); High Tech Manufacturing & Logistics
(technology-enabled fabrication & distribution
of physical goods). Does not generally invest
in: biotech, consumer-driven businesses (e.g.
retail, restaurants, B2C or C2C internet),
dollars-for-hours businesses (e.g. consulting,
systems integration), interest rate spread
businesses (e.g. banking, insurance), publicly
traded or very large private businesses, real
estate or franchisees.
To view their Business Plan Submission
Guidelines visit:
www.rccf.com/process2.htm
PROFILES: VENTURE CAPITAL FUNDS ACTIVE IN NORTH CAROLINA
(as of August 2011)
107
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
SJF Ventures 1999 N/A
Early Stage -
Expansion Stage
$1 - $10 Million
Cleantech, Business, and Web-enhanced
services & premium consumer products
sectors.
"The mission of SJF is to create quality
employment for low wealth citizens and
communities by financing and assisting
companies that generate social,
environmental, and financial gains."
SJF is certified as a community
development financial institution
(CDFI).
SSM Ventures N/A >$156 million
Primarily in Expansion
& Later Stages; only
opportunistically in
Early Stages
$5 million to $20 million
Non-technology & Technology-based
businesses (healthcare, business
outsourcing), and Consumer Service
companies.
Sapient Capital
Management, LLC
N/A $26 million
Seed, Start-up & Early
Stage
$2 million to $3 million
Exclusively in Healthcare (esp. medical
devices).
Sapient prefers investments west of the
Mississippi River, but will consider other
geographic areas; has recently invested
in NC.
SV Life Sciences, Inc. 1993 $2 billion All Stages $5 million to $20 million
Exclusively in Life Sciences
(biotechnology, pharmaceuticals, medical
devices & instruments, healthcare IT &
services).
iSherpa Capital, LLC 2003 N/A Seed & Early Stage N/A
Exclusively in Wireless & Supporting
Technologies.
Firm stays actively involved. "We place
our firm's staff on site at our portfolio
companies to provide operational
expertise."
Siemens Venture
Capital, Inc. (SVC)
N/A >$500 million
Early & Expansion
Stage
approximately $500,000 to $5
million
Information & Communications
(including wireless); Medical Solutions
(including diagnostics); Industrial
Automation & Power; Automotive &
Networked Transportation Systems;
Energy Management.
SVC identifies and funds investments in
emerging and innovative technologies
that will enhance the core business
scope of Siemens AG" (its German-
based parent).
SilkRoad Equity LLC 2003 N/A All stages $1 to $20 million
Technology, Media and Entertainment,
Life Sciences, Telecommunications, Retail
(food and non-food),Manufacturing,
Business Services
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CAP I T AL OP P ORT UNI T I ES F OR SMAL L BUS I NES S ES
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Sippl Investments LLC 1995 $30 million
Early Stage &
Emerging
$200,000 to $750,000
Exclusively in Software (internet &
enterprise software).
Invests primarily in companies located
in Silicon Valley; has recently invested
in NC.
Southern Capitol
Ventures
2000 N/A Seed & Early Stage $500,000 - $1.5 Million
Exclusively in Information Technology
and Life Sciences.
Spencer Trask
Ventures, Inc.
N/A N/A Early Stage N/A Varies
Sterling Partners 1983 $4 billion
Early Stage &
Expansion Stage
$5 million to $150+ million
Healthcare, Software, Industrial
Technology, and Business Services. To
view a more detailed list visit:
www.sterlingcap.com/venture/focus/
Tall Oaks Capital 2000 $12.5 million Seed & Early Stage $50,000 to $1.5 million
Primarily in Information Technology and
Life Sciences.
A Village Ventures Affiliate Fund.
Texas Pacific Group
(TPG) Capital
1992 $48 billion
Early Stage &
Acceleration Round
$10 million to $20 million total
per company/venture
Information Technology and
Biotechnology, with an emerging practice
in Consumer-based opportunities.
Three Arch Partners 1993 >$600 million
Seed & Early Stage
(Three Arch Parters III
Fund ($200 million));
Development Stage
(Three Arch Capital
Fund ($300 million)).
$100,000 to $10 million
Exclusively in Healthcare/Life Sciences
(biotechnology, biopharmaceuticals,
healthcare information technology,
healthcare services & medical devices).
Total Technology
Ventures, LLC (TTV)
2000 $1 billion Mid- to Late-Stage $100,000 to $15 million
Financial Services industry, and IT driven
businesses with products that serve the
financial services industry (financial
services software & infrastructure
solutions, payment technology/E-
commerce enablers,
authentication/security, cash & asset
management, investment technology).
The Treyls Funds 2001 N/A
Early to Mid-Stage;
generally does not
consider Seed Stage
investments
$500,000 to $3 million
Generally in Information Technologies,
Communications Technologies,
Biotechnology, and Life Sciences, but
may consider others matching its
investment criteria.
PROFILES: VENTURE CAPITAL FUNDS ACTIVE IN NORTH CAROLINA
(as of August 2011)
109
Venture Firm
Year
Founded
Capital Under
Management
Preferred Stage of
Financing
Preferred Size of
Investment
Preferred Industries Website Comments
Updata Venture
Partners
1988 >$500 million All Stages $2 million to $5 million
Exclusively in Information Technology
(enterprise software, information
services, transaction processing, financial
technologies, healthcare IT, business
services & outsourcing, IT services).
Primarily a private equity firm, but open
to earlier stage opportunities.
VantagePoint Venture
Partners
1996
>$4.5 billion
All Stages (seed stage
through mezzanine
rounds)
N/A
Communications & Systems,
Semiconductor & Components, Software
& services, related growth industries.
To view their Business Plan Guidelines
visit: www.vpvp.com/submit/index.asp
Versant Ventures-
Versant Ventures II
Fund
1999 $1.6 billion Early Stage N/A
Medical Devices, Healthcare Services,
Healthcare Information Technology, and
Life Sciences (biopharmaceuticals,
biotechnology platforms).
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Finding Venture Capital Statistics & Trends and Monitoring Current (NC) VC Activity online:
1. PricewaterhouseCoopers’, Thomson Reuters, and the National Venture Capital Association’s
MoneyTree Report- www.pwcmoneytree.com
- Data by State, Region, MSA & Congressional Districts:https://www.pwcmoneytree.com/MTPublic/ns/index.jsp
2. National Venture Capital Association (NVCA)- www.nvca.org
3. Triangle Business Journal- triangle.bizjournals.com/triangle/ - run a Search for keyword
“venture capital”.
4. The Business Journal of the Greater Triad Area- www.bizjournals.com/triad/ - run a Search for
keyword “venture capital”.
5. Charlotte Business Journal- www.bizjournals.com/charlotte/ - run a Search for keyword
“venture capital”.
Commercial Bank Investing Arms
BB&T Capital Partners, LLC
200 West Second St.
Winston-Salem, NC 27101
336.733.2420
www.bbandt.com/capitalpartners
additional office in Charlotte
Bank of America Capital Investors
100 North Tryon St., 25
th
Floor
Charlotte, NC 28255
704.386.4710
[email protected]
www.bacapitalinvestors.com
CIBC World Markets
One Alliance Center
3500 Lennox Rd.
Suite 730
Atlanta, GA 30339
770.319.4999
www.cibcwm.com/wm/
Arcapita Inc.
(a subsidiary of Arcapita Bank B.S.C. of
Bahrain)
75 Fourteenth St., 24
th
Floor
Atlanta, GA 30309
404.920.9000
www.arcapita.com
Venture Capital Solutions, LP
c/o VCS Management, LLC
(subsidiary of Southern Community Bank &
Trust)
112 Cambridge Plaza Dr.
Winston-Salem, NC 27104
336.768.9343
[email protected]
www.vcslp.com
Wachovia Capital Partners
301 South College St., 12
th
Floor
NC0732
Charlotte, NC 28288-0732
704.383.0000
www.wachoviacapitalpartners.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Private Equity Providers (Private Equity Firms)
Note: Firms marked with a * may also be found in the
venture capital section of the report
Adams Street Partners, LLC
One North Wacker Dr., Suite 2200
Chicago, IL 60606-2823
312.553.7890
[email protected]
www.adamsstreetpartners.com
Apax Partners, L.P.
601 Lexington Ave., 53
rd
. Floor
New York, NY 10022
212.753.6300
[email protected]
www.apax.com
Argosy Partners
950 West Valley Rd., Suite 2900
Wayne, PA 19087
610.971.9685
www.argosycapital.com
Ballast Point Venture Partners
880 Carillon Parkway
St. Petersburg, FL 33716
727.567.1500
[email protected]
www.ballastpointventures.com
Bison Capital Asset Management, LLC
401 North Tryon St., 10th Floor
Charlotte, NC 28202
704.333.4899
James K. Hunt, Managing Partner
[email protected]
www.bisoncapital.com
Blue Point Capital Partners
201 South Tryon St., Suite 850
Charlotte, NC 28202
704.347.1111
[email protected]
www.bluepointcapital.com
Boston Millennia Partners
30 Rowes Wharf, Suite 500
Boston, MA 02110
617.428.5150
[email protected]
www.millenniapartners.com
CapitalSouth Partners, LLC
4201 Congress Street, Suite 360
Charlotte, NC 28209
704.376.5502
[email protected]
www.capitalsouthpartners.com
additional office in Raleigh
Carousel Capital
201 North Tryon St., Suite 2450
Charlotte, NC 28202
704.372.2040
www.carouselcapital.com
Cherokee Investment Partners
111 E. Hargett St. #300
Raleigh, NC 27601
919.743.2500
www.cherokeefund.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Chapter IV Investors
301 South Tryon Street, Suite 1850
Two Wachovia Building
Charlotte, North Carolina 28202
704.644.4070
www.chapterivinvestors.com
Core Capital Partners
1401 I Street NW, Suite 1000
Washington, DC 20005
202.589.0090
[email protected]
www.core-capital.com
Digital Power Capital, LLC
411 West Putnam Ave., Suite 125
Greenwich, CT 06830
203.862.7045
www.digitalpower.com
Easton Hunt Capital Partners, LP*
767 Third Ave.
New York, NY 10017
212.702.0950
[email protected]
www.eastoncapital.com
Falfurrias Capital Partners
100 North Tryon Street, Suite 5120
Charlotte, NC 28202
704.371.3220
www.falfurriascapital.com/
Fenway Partners, Inc.
152 West 57th St., 59
th
Floor
New York, NY 10019
212.698.9400
[email protected]
www.fenwaypartners.com
Franklin Street Partners
1450 Raleigh Rd., Suite 300
Chapel Hill, NC 27517
919.489.2600 or 877.489.2600
www.franklin-street.com/
Frontier Capital, LLC
1111 Metropolitan Ave.
Charlotte, NC 28204
704.414.2880
[email protected]
www.frontiercapital.com/
General Catalyst Partners
20 University Rd., Suite 400
Cambridge, MA 02138
617.234.7000
[email protected]
www.generalcatalyst.com
Grotech Capital Group
8000 Towers Crescent Dr. Suite 850
Vienna, VA 22182
703.637.9555
www.grotech.com
The Halifax Group
3605 Glenwood Ave., Suite 490
Raleigh, NC 27612
919.786.4420
www.thehalifaxgroup.com
Harbert Management Corporation*
HMC-Virginia, Inc.
1210 East Cary St., Suite 400
Richmond, VA 23219
804.782.3800
www.harbert.net
H.I.G. Capital*
Two Buckhead Plaza
3050 Peachtree Rd. NW, Suite 360
Atlanta, GA 30305
404.504.9333
[email protected]
www.higcapital.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Lovett Miller & Co., Inc*
W. Radford Lovett II
One Independent Dr., Suite 1600
Jacksonville, FL 32202
904.634.0077
[email protected]
W. Scott Miller
100 North Tampa St., Suite 2675
Tampa, FL 33602
813.222.1477
[email protected]
www.lovettmiller.com
MB Venture Partners, LLC
17 West Pontotoc, Suite 200
Memphis, TN 38103
901.322.0330
[email protected]
www.mbventures.com
M/C Venture Partners
75 State St., Suite 2500
Boston, MA 02109
617.345.7200
[email protected]
www.mcventurepartners.com
Morgenthaler Partners
Terminal Tower
50 Public Square, Ste 2700
Cleveland, OH44113
216.416.7500
www.morgenthaler.com/private-equity/
QuestMark Partners, LP
One South St., Suite 800
Baltimore, MD 21202
410.895.5800
[email protected]
www.questmarkpartners.com
Renaissance Ventures, LLC
33 South 13th St., 3rd Floor
Richmond, VA 23219
POB 2157
Richmond, VA 23218
804.643.5500
[email protected]
www.renventures.com
SSM Ventures*
Crescent Center
6075 Poplar Ave., Suite 335
Memphis, TN 38119
901.767.1131
www.ssmventures.com
Sapient Capital Management, LLC*
4020 Lake Creek Dr. (Federal Express)
POB 1590 (Postal Service)
Wilson, WY 83014
307.733.3806
[email protected]
www.sapientcapital.com
Seaport Capital
40 Fulton Street, 27
th
Floor
New York, NY 10038
212.847.8900
[email protected]
www.seaportcapital.com
Sterling Venture Partners
650 S. Exeter Street, Suite 1000
Baltimore, MD 21202
443.703.1700
www.sterlingpartners.com
Triangle Capital Corp.
3700 Glenwood Ave., Suite 530
Raleigh, NC 27612
919.719.4770
www.tcap.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Updata Partners
Two Freedom Square
11955 Freedom Dr., Suite 7000
Reston, VA 20190
703.736.0020
[email protected]
www.updatapartners.com
Warburg Pincus LLC
450 Lexington Ave.
New York, NY 10017
212.878.0600
[email protected]
www.warburgpincus.com
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Securities Offerings
Regulation D (Rule 504)
The issuance of equity securities usually must be registered with the Securities and Exchange
Commission (SEC). Registration documents include detailed disclosure, historical financial statements,
and third-party audits. This can be a costly process. A private placement, however, is exempt from
federal registration. A private placement under Regulation D of the security code can minimize costs
and delays while giving a business access to equity capital.
Rule 504 is the most commonly used Regulation D exemption. Under Rule 504, the SEC exempts
companies that are raising up to $1 million from most of the SEC registration and reporting rules that
govern larger stock sales. The only restriction is that the company must not raise more than $1 million
over a twelve-month period before or after the offering. Somewhat more restrictive requirements for
Regulation D exemptions are outlined under Rules 505 and 506 for larger offerings that include non-
accredited investors. Rule 504 itself has no prescribed disclosure requirements, no limit on the number
of purchasers, and no investor sophistication standards. If the company adheres to the above limits, it
can advertise and sell to any number of people. Some states require additional filings and impose
further restrictions. Regulations must be looked into on a state-by-state basis where it is anticipated
that the securities will be sold. It is important to remember that the exemptions from registration
provided by Regulation D do not include exemptions from the anti-fraud or civil liability provisions of
any of the federal or state securities laws.
Although the 504 offering seems tailor-made for entrepreneurs, even simplified stock offerings carry a
cost. These offerings are designed to be conducted without the use of an investment banker, but there
still are costs associated with marketing the stock offering. The company must either sell the security
offering itself or engage the assistance of a licensed brokerage firm. Handling the administration for
the first time may lead to unanticipated delays in putting out the issue. Additionally, this method is not
for all small companies considering stock offerings. If the company is growing quickly, it may be able to
raise more capital by waiting for a traditional IPO.
Small Corporate Offering Registration (SCOR)
The Small Corporate Offering Registration (SCOR) was adopted by the North American Securities
Administrators Association to standardize state filing requirements in conjunction with Regulation D,
Section 504, security offerings. SCOR standardizes the state filing process with Form U-7, the general
registration form for corporations registering under state securities laws. Up to $1 million may be
raised at a minimum offering price of one dollar ($1) per share. Prior to using Form U-7, a company
should contact the staff of the securities administrator of each state in which the offering is to be filed
to review applicable substantive fairness standards. Please note that not all states have adopted the
use of Form U-7. The U-7 and issuer’s manual may be located through the North American Securities
Administrators Association’s website: www.nasaa.org.
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Assistance with Filings:
NC Department of the Secretary of State
Securities Division
POB 29622
Raleigh, NC 27626-0622
919.733.3924 or 800.688.4507
www.secretary.state.nc.us/sec
Initial Public Offering (IPO)
An initial public offering (IPO) refers to a company’s initial sale of securities to the general public. The
key considerations for deciding whether to “go public” include company size, profitability, current
stock market conditions, nature of industry, market share, experience of management, and future
outlook for the business and industry. Generally, a company needs revenues of around $10 million and
net income of $1 million to be considered an IPO candidate.
An IPO offers the advantage of raising capital for growth while increasing the liquidity of the
corporation. The offering may also improve the ability to borrow in the future since lenders favorably
view a lower debt-to-equity ratio. The disadvantages of public offerings include the possible loss of
control, required disclosure of a wide array of business and personal information, and substantial costs.
Key considerations include company size, profitability, quality of management, market share, industry
position and trends, stock market conditions and other factors. Issues such as feasibility, control,
disclosure and costs must be accurately assessed prior to committing to the IPO process. As a rule,
costs will be at least 10% of the proceeds – higher for smaller or less attractive issues. It is also
important to remember that quarterly performance is strictly monitored and can significantly affect
stock price.
Discussing your company’s objectives with a professional will assist you in making the appropriate
decisions. One such professional is the investment banking firm that underwrites the deal. The
company you choose should have a history of successfully assisting other companies through the IPO
process.
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Investment Intermediaries – Investment Banking
NC Firms that handle IPOs & related transactions
The Capital Corporation
84 Villa Rd.
Greenville, SC 29615
Toll Free 800.259.0119 / 864.672.8400
www.thecapitalcorp.com
Cary Street Partners
Wachovia Tower
300 North Greene St., Suite 860
Greensboro, NC 27401
336.275.8080
www.carystreetpartners.com
Deutsche Banc
100 N. Main St., Suite 2400
Winston-Salem, NC 27101
336.724.6921 or 800.553.6015
www.db.com
Morgan Keegan & Company
3700 Glenwood Ave., Suite 250
Raleigh, NC 27612
Telephone: 919.784.8300
www.morgankeegan.com
also locations in Charlotte, Durham, Greensboro, and
Wilmington
Scott & Stringfellow, Inc.
3605 Glenwood Ave., Suite 400
Raleigh, NC 27612
800.763.1893
[email protected]
www.scottstringfellow.com
also 10 other locations in NC
SunTrust Robinson Humphrey, Inc.
3333 Peachtree Rd., NE
Atlanta, GA 30326
404.926.5000https://www.suntrustrh.com
Wachovia Securities LLC –Wells Fargo Advisors
401 South Tryon St.
Charlotte, NC 28202
704.379.9283
www.wachoviasec.com
Joint Ventures and Strategic Alliances
Partnerships can be a survival strategy primarily adopted by small, high-tech firms in need of a large
marketing partner. The number of alliances entered into by small companies has continued to rise in
recent years. An alliance can enable a small firm to expand revenues without taking on additional
employees. The term strategic alliance has come to mean everything from the simplest transactional
relationship to licensing and outsourcing -- to anything short of a merger.
A growing number of large corporations are funding small companies as a pipeline for new products
and markets. A small business teaming with a corporate giant may obtain start-up or research and
development funds at better terms than the average venture capital deal. These alliances generally
involve an entrepreneur receiving an infusion of capital in exchange for giving a large corporation the
right to sell or market their product. Since the large corporation is more interested in the technology
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
than in the small company, it will often front money to develop a product in exchange for a low
percentage stake in the small company.
In forming partnerships with larger firms, small firms must ensure that their partners have the same
strategic intent. Larger firms will look for a clean balance sheet, a strong pattern of growth, and a
commitment to quality in expanding small companies. The more divergent the partners’ expectations,
the less likely the partnership will be successful. The key reasons for failure are unequal levels of
technical or business competence, and low prioritization by one or both companies for the project.
Crowdfunding
Crowdfunding (alternately crowd financing or crowd-sourced fundraising) is the collective effort of
individuals who network and pool their money, usually via the Internet, to support efforts initiated by
other people or organizations. There are two primary types of crowdfunding: (1) donation-based and
(2) investment-based or equity crowdfunding.
Donation-based crowdfunding is used to support a wide variety of activities, including art and film
projects, new inventions, research, civic projects, charitable causes, start-up companies, etc.
Individuals donate In exchange for a reward or perk (e.g. recognition, product, discount, free passes).
Individuals do not receive any ownership or equity stake in the venture. Each campaign is set for a
goal amount of money and a fixed number of days. Popular sites include Kickstarter
(www.kickstarter.com) and Indiegogo (www.indigogo.com).
Crowdfunding can also refer to funding a company by selling small amounts of equity to many
investors. This form of crowdfunding was recently addressed in the JOBS Act legislation that provides
the ability for the general public to receive company equity in exchange for funding. The Securities and
Exchange Commission (SEC) is in the process of developing rules for crowdfunding investments by
accredited and non-accredited investors. Until the new guidelines are finalized, crowdfunding
platforms will not legally be able to exist as equity based models without operating under the license
of a broker-dealer. The SEC currently expects to issue equity crowdfunding rules in Fall 2013.
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
CHAPTER 7: PRIVATE, NOT-FOR-PROFIT AND LOCAL
PROGRAMS
NC Biotechnology Center (NCBC)
The mission of the Biotechnology Center is to ensure that North Carolina gains long-term economic
benefits from the development and commercialization of biotechnology statewide. The Center, which is
primarily funded by the North Carolina General Assembly, provides financial assistance to
biotechnology companies.
Source: www.ncbiotech.org/billion
North Carolina Biotechnology Center
15 T. W. Alexander Dr.
POB 13547
Research Triangle Park, NC 27709-3547
919.541.9366
[email protected]
www.ncbiotech.org
Greater Charlotte Office: 704.687.8563
Eastern Office (Greenville): 252.328.9981
Piedmont Triad Office (Winston-Salem): 336.725.6672
Southeastern Office (Wilmington): 910.763.5747
Western Office (Asheville): 828.670.3394 Ext. 101
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
Company Inception Loan
The CIL Program is designed to help bridge the early-stage funding gap that many North Carolina
biotechnology companies face. Through the CIL program, loans of up to $50,000 are available for
biotechnology companies in North Carolina. This program supports non-scientific business inception
and related activities that are critical to the early-stage start-up of a biotechnology company. Contact
Joseph Nixon at [email protected] with questions regarding this program or to schedule a
preliminary meeting.
Small Business Research Loan Program (SRL)
The Small Business Research Loan Program funds research leading to the development or refinement of
a product or process with commercial potential. North Carolina biotechnology companies may be
eligible for loans of up to $250,000. The availability depends, in part, upon successfully meeting
research milestones. To date, the program has provided over $10 million in seed capital to over 60
small companies for early stage research and development. In fiscal year 2012, 5 loans were made,
totaling $795,051. Contact Shobha Parthasarathi at (919) 541-9366 or
[email protected] with questions regarding this program or to schedule a
preliminary meeting.
Strategic Growth Loan (SGL)
The SGL Program is designed to help bridge the early-stage funding gap that many North Carolina
biotechnology companies face. Through the SGL program, loans of up to $250,000 are available for
biotechnology companies in North Carolina. Importantly, SGL funds must be matched by an equal
investment or loan from one or more organized angel funds or networks (“Angel Groups”) or venture
capital funds (“VCs”). This program is intended to fund companies to reach specific and meaningful
milestones that will enable them to obtain further funding from private investors. Contact Joseph Nixon
at [email protected] with questions regarding this program or to schedule a preliminary
meeting.
Technology Enhancement Grant (TEG)
The Technology Enhancement Grant (TEG) Program provides non-repayable grant funding to North
Carolina universities or other NC research institutions through their respective technology transfer
offices. Under this program, awards of up to $50,000 are available to fund a commercially-focused
research study to enhance the university’s licensing position for a commercially promising technology.
The proposed project will ideally incorporate study endpoints designed to directly addresses license-
enabling milestones required by potential licensees. Contact Dr. Rob Lindberg at (919) 549-8826 or
[email protected] with questions regarding this program or to schedule a preliminary
meeting.
Business Acceleration and Technology Out-licensing Network (BATON)
BATON leverages $50,000 in Technology Enhancement and Acceleration Model (TEAM) loans from the
Biotechnology Center with in-kind or contributed services from certified stakeholders such as law firms,
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banks and accountants to accelerate the commercialization of promising technologies. BATON paves
the way for new company spinouts by staging many of the essential start-up activities such as
researching and creating business plans, identifying potential intellectual property and corporate law
firms, developing a banking relationship and presenting the company to local angel and venture
groups, thereby positioning the startups for future investment and growth.
Business Development Loan Program
The Business Development Loan Program provides financial assistance to North Carolina biotechnology
firms with low-interest matching loans for early stage business development-related activities. This
loan supports non-scientific activities critical to the future commercialization of a company's
technology. A company may request up to $25,000 (minimum $15,000) through the Business
Development Loan program and must provide a dollar-for-dollar match of these funds. The company
will be required to certify it can provide matching money. In-kind contributions cannot be considered
toward the company match.
Collaborative Funding Grant (CFG) Program
The Collaborative Funding Grant (CFG) supports a university-company partnership that will advance a
company’s technology toward the marketplace. This grant provides funds for a post-doctoral fellow or
technician in a university lab to conduct research on a project of commercial interest. University
investigators and companies first form the collaboration and then apply together through the
university. The CFG is jointly sponsored by the Biotechnology Center and the Kenan Institute for
Engineering, Technology and Science at North Carolina State University.
Any North Carolina company may submit a CFG proposal in conjunction with any public or private
North Carolina university. CFG Program awards are disbursed to the participating university. The award
amount from NCBC/Kenan is between $40,000 and $50,000 per year, depending on the size of the
participating company. The required matching amount from the participating company is between
$10,000 and $20,000 based on a sliding scale with smaller companies required to contribute fewer
funds. Regardless of company size, the total cash amount provided to the university, for research is
$60,000. The university must provide an in-kind match of $20,000, bringing the total package to
$80,000 per year.
Small Business Innovation Research (SBIR) Bridge Loan
The SBIR Bridge Loan program provides financial assistance in the form of low-interest loans as gap
funding to maintain the momentum of technology development begun as a Phase I project and
building toward Phase II funding.
North Carolina companies, who received Phase I SBIR grants for biotechnology-related product
development, processes, or services, are eligible for consideration for financial support. It is assumed
the candidate company has completed (or is nearing completion) of a successful Phase I SBIR project
and intends to apply for SBIR Phase II grant funding (there is no requirement to eventually receive the
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Phase II grant). Up to $150,000 may be requested to support research activities lasting up to six
months.
Entrepreneur Focused Support Groups, Councils and Networks
There are several entrepreneur focused support groups -- often identified as councils, networks, or
roundtables -- in the North Carolina network. These groups have been organized in most cases by local
business owners to provide valuable resources to entrepreneurs in their region. Their individual services
vary slightly, but all are focused on providing unique educational and networking opportunities to their
members.
The Council for Entrepreneurial Development (CED) is the largest entrepreneurial support organization
in the world and maintains a current contact list of venture funds operating in North Carolina. The
CED’s annual Venture Capital Conference, held in April, matches entrepreneurs with venture capitalists
and private investors throughout the country. Entrepreneurs seeking capital submit a business plan to
the selection committee; firms selected have the opportunity to present their request to over 300
investors attending the event.
Entrepreneurial Councils & Networks in NC
Blue Ridge Entrepreneurial Council (BREC)
c/o Advantage West
134 Wright Brothers Way
Fletcher, NC 28732
828.687.7234
www.brecnc.com
Council for Entrepreneurial Development
CED Entrepreneurship Center
Strickland Bldg @ The American Tobacco
Campus
224 Blackwell Street, Suite B012
Durham, NC 27701
POB 13353
Research Triangle Park, NC 27709
919.549.7505
www.cednc.org
NorthEastern Entrepreneurial Roundtable
(NEER)
Rocky Mount Area Chamber of Commerce
POB 392
Rocky Mount, NC 27803-0392
252.973.1212
SouthEastern Entrepreneurs Roundtable
Methodist University
5400 Ramsey St.
Fayetteville, NC 28311
910.630.7642
NC Rural Economic Development Center
In July 2013, the NC General Assembly eliminated funding for the NC Rural Economic Development
Center, and created a new Rural Economic Development Division within the NC Department of
Commerce. The new division will oversee an infrastructure grant program for rural counties, and a new
program to provide “matching grants or loans” to local governments in economically distressed
counties for reuse of vacant buildings/properties, or to construct/expend rural health care facilities.
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Information on these programs will be added online as it becomes available.
Microenterprise Loan Program
The Microenterprise Loan Program provides loans and business services to self-employed individuals
and other very small firms. The program helps rural people attain self-sufficiency by providing the
opportunity for self-employment and small business growth. It provides loans for start-up or expansion
of small businesses by individuals who do not qualify for conventional loans. The program serves all 85
rural counties in North Carolina. Specific emphasis is placed on providing services to rural, low-income,
female/minority participants.
Four local lending sites operate group-based lending programs. Individual entrepreneurs participate in
these programs by forming groups of four to ten people. Once certified, the group can make credit
decisions for its individual members. The group makes loans, and all loans must be current in order for
the group to consider extending additional loans. This program is based on a tiered lending structure
that allows an initial loan of up to $2,500 per individual within the group. When that loan is paid off,
the next loan may be for up to $5,000. After this is successfully repaid, a loan of up to $8,000 may be
issued.
The individual lending program uses a referral network to provide access to capital. Loan requests are
directed from referrals straight to the Rural Center where the credit committee reviews the loan
application and makes a loan decision. Up to $25,000 may be loaned under the individual program
based on demonstrated need. All loans must be secured and the process for obtaining credit is similar
to that used by a commercial bank.
One local site operator, NC REAL Enterprises, provides individual-based loans in conjunction with a
training program. REAL provides loans up to $25,000 to youths and adults who complete the Real
Entrepreneurship course at a participating high school or community college and complete a
comprehensive business plan.
North Carolina Rural Economic Development Center
NC Microenterprise Loan Program
4021 Carya Dr.
Raleigh, NC 27610
919.250.4314
www.ncruralcenter.org/loans/micro.htm
Microenterprise Loan Program Participants
Carteret Microenterprise Loan Program
Carteret Commmunity College
3505 Arendell St.
Morehead City, NC 28557
252.222.6016
[email protected]
Microenterprise Loan Partnership, Lenoir
Community College
327 North Queen St.
Kinston, NC 28501
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252.522.8021
Type: Group
Counties: Greene, Jones, Lenoir, and Wayne
www.lenoircc.edu/Small_Business_Center/micl
oanindex.htm
Mountain BizWorks, formerly Mountain
Microenterprise Fund
153 S. Lexington Ave.
Asheville, NC 28801
828.253.2834
Type: Group
Counties: Buncombe, Cherokee, Clay, Graham,
Haywood, Henderson, Jackson, Macon,
Madison, Polk, Swain, and Transylvania
www.mountainbizworks.org
NC Institute of Minority Economic
Development
114 W. Parrish St.
Durham, NC 27701
919.956.8889
Type Individual
Counties: All 100
www.ncimed.com
NC REAL Enterprises
3739 National Dr., Suite 110
Raleigh, NC 27612
919.781.6833
Type: Individual
Counties: active programs in 74 counties
www.ncreal.org
River City CDC
501 East Main St.
Elizabeth City, NC 27909
252.331.2925
Type: Individual
Counties: Camden, Chowan, Martin,
Pasquotank, Perquimans, and Tyrell
www.rivercitycdc.org
Roanoke Electric Co-op
POB 1326
Ahoskie, NC 27910
252.209.2236
Type: Individual
www.roanokeelectric.com/default.aspx
Tyrell CDC
POB 58
Columbia, NC 27925
252.796.1991
Type: Individual
Upper Coastal Plains Council of Governments
Post Office Drawer 2748
1309 South Wesleyan Blvd
Rocky Mount, NC 27802
252.446.0411
Type: Individual
Counties: Edgecombe, Halifax, Nash,
Northampton and Wilson
www.ucpcog.org
Yadkin Valley Economic Development District
Inc.
POB 1840
205 South Jackson St.
Yadkinville, NC 27055
336.679.2200
Type: Individual
Counties: Davie, Surry, Stokes, and Yadkin
Defense Ventures Fund
In mid-2005 Neuse River Development Authority received approval from the Golden LEAF Foundation for a
grant to the Authority in the amount of $2 million to establish a Defense Ventures Fund. The Fund became
active in 2006 and is designed to assist North Carolina companies or companies re-locating to North Carolina
that are currently active or wish to become active in the Defense Contracting Industry. The “Defense”
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definition includes all branches of the Armed Forces, Department of Defense, Homeland Security as well as
certain State Department activities such as embassy protection, etc. While the Fund concentrates on
manufacturing companies, all service and other Defense related industries will be considered for eligibility. The
Fund can invest up to $250,000 per company in the form of “Subordinated Debt”. Contact Guy Williams at
252.638.6724
North Carolina Capital Access Program
The Rural Center, in conjunction with 11 participating banks, initiated this program in 1994. The program
provides loans to small and medium-sized businesses through participating banks in the state. Permissible
Borrowers include corporations, partnerships, joint ventures, sole proprietorships, state-designated charitable,
religious, or other non-profit or eleemosynary institutions, government-owned corporations, consumer and
marketing cooperatives, and faith-based organizations. A special reserve fund was created to protect the
institutions against losses from loans enrolled in the program. Funds for the Capital Access Program reserve, in
the amount of $4 million, have been provided by the Golden LEAF Foundation, the Appalachian Regional
Commission, the US SBA, and the N.C. General Assembly. These funds are expected to generate over $120
million in small business loans.
This enables North Carolina’s financial institutions to increase lending for business start-ups and expansions
without sacrificing credit quality in the bank’s overall loan portfolio. The average loan size is just over $50,000.
Any legal business entity incorporated in one of the 85 rural counties of North Carolina is eligible. Businesses
interested in the program should contact a commercial loan officer of one of the participating financial
institutions.
Participating institutions include Branch Banking & Trust Company, East Carolina Bank, First Bank of Troy, First
Citizens Bank, First National Bank of Shelby, High Country Bank, Lumbee Guaranty Bank, Macon Bank, Neuse
River Development Authority, Piedmont Bank, Randolph Bank & Trust Company, and Yadkin Valley Bank
North Carolina Rural Economic Development Center
4021 Carya Dr., Raleigh, NC 27610
919.250.4314
www.ncruralcenter.org
Clean Water Partners Program
Clean Water Partners Program assists communities with planning activities, such as feasibility studies, capital
improvement plans and engineering studies, for water and sewer infrastructure.
Planning grants may be used for projects that address a critically needed solution to an infrastructure problem.
The aim is to assist rural communities in preparations that will lead to affordable solutions in meeting their
water and waste needs. Priority will be given to communities that are in violation of public health and
environmental rules and regulations, to get them back into compliance. Documentation of the critical need is
required to support the grant request.
Additional details may be found at www.ncruralcenter.org, or contact Julie Cubeta at (919) 250-4314 or
[email protected] (To go straight to the application, see the Find It Fast menu on the right, and
click on “Grant application and Reporting Forms.”)
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Economic Infrastructure Program
The N.C. Rural Economic Development Center announces $5.5 million in grants to create jobs, provide clean
water and assist with economic development in rural counties. The 36 grants will create 660 jobs and assist
projects benefiting more than 32 counties. (4/25/13)
Economic Infrastructure Program supports rural infrastructure projects associated with an expanding business or
a new business location. Grant awards vary according to the type of project. Generally, for water and sewer,
natural gas and broadband, grants are available for up to $10,000 for each job created, with a maximum grant
of $1 million or one-half the total project cost, whichever is less. Other grants are limited to $5,000 per job,
with a maximum of $500,000 or one-half the total project cost.
Applications are available at www.ncruralcenter.org (See the Find It Fast menu on the right, and click on “Grant
Application and Reporting Forms.”) For other inquiries, contact George T. Collier at (919) 250-4314 or
[email protected].
Building Reuse and Restoration Grants
Building Reuse and Restoration Grant spurs business activity and job creation by maximizing the economic
potential of existing structures. Grants assist communities with the reuse of vacant buildings and with the
expansion and renovation of buildings occupied by certain types of business.
$5,000 or $10,000 per job is available depending on type of use and location. The maximum for any grant is
$480,000 or one-half the renovation cost, whichever is less.
Applications are available at www.ncruralcenter.org (See the Find It Fast menu on the right and click on “Grant
Application and Reporting Forms.”) For other inquiries, contact Melody Adams at (919) 250-4314 or
[email protected].
Rural Hope (Rural Health Care Initiative)
Rural Hope spurs economic activity and job creation by assisting in the construction and/or renovation of rural
health care facilities. Rural Hope grants help local governments, in partnership with private or nonprofit health
care agencies, build or renovate health care facilities. These facilities may include – but are not limited to –
hospitals, urgent care centers, hospice centers, elder care facilities and offices for physicians, dentists, vision
care specialists and mental health care providers
Applications are available at www.ncruralcenter.org (See the Find It Fast menu on the right and click on “Grant
Application and Reporting Forms.”) For other inquiries, contact Melody Adams at (919) 250-4314 or
[email protected].
Rural Community Mobilization Project
Rural Community Mobilization Project helps laid-off rural workers and other adults facing unemployment or
underemployment return to full-time jobs. Grants encourage rural organizations to collaborate on workforce
development strategies that connect job seekers to jobs. Successful applications will present a demand-driven
workforce development project with the involvement of employers to ensure that participants can find jobs after
receiving training and other services. Successful applications will also demonstrate new or expanded
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collaboration among public and nonprofit service providers and between workforce and economic development
organizations.
Grant guidelines are available at www.ncruralcenter.org (See the Find It Fast menu on the right and click on
“Grant Application and Reporting Forms.”) For other inquiries, contact Michael Aheron at
[email protected] or Anne Bacon at [email protected]. Both can be reached at (919) 250-4314.
Economic Innovation Grants Program
Economic Innovation Grants spur business activity, job creation and investment in North Carolina’s rural
communities by supporting innovative economic development project in priority funding areas. The program
serves as a laboratory in which innovative economic development strategies can be employed and tested in
rural communities. The goal of the program is to ensure that rural areas benefit from advances in economic
development research and practice through economic growth, good jobs and a higher quality of life.
The program guidelines and intent to apply form are available at www.ncruralcenter.org (See the Find It Fast
menu on the right and click on “Grant Application and Reporting Forms.”) For other inquiries, contact Brett
Altman (919) 250-4314 or [email protected].
Project GATE (Growing America Through Entrepreneurship)
Project GATE encourages self-employment as a career alternative for interested laid-off workers. GATE is a
scholarship program that provides free training and coaching to help dislocated workers interest in starting a
business. The North Carolina GATE program is offered by the Rural Center in partnership with several key North
Carolina partners, including the N.C. Small Business Center Network.
Interested individuals may apply through their local JobLink Career Center or visit the website,
www.ncprojectgate.org. For more information, contact Barry Ryan at (919) 250- 4314 or
[email protected].
New Generation Ventures
New Generation Ventures encourages self-employment as a career option for rural young adults ages 18-30. It
is a statewide program for young adults who will start a business in one of North Carolina’s 85 rural counties.
Coaching and training are delivered by phone, email and online. In addition, classroom training and face-to-face
business counseling are available through a network of partnering organizations, including the North Carolina
Community College System – Small Business Center Network.
With public and private support, the center in 2012:
? Awarded 11 grants to engage teams of young people in community improvement projects.
? Awarded 14 grants to train and place rural young people in high-demand career fields with job
opportunities close to home.
? Worked with 133 young adults interested in starting businesses in rural areas. A dozen business
startups had created 32 jobs by year end.
? Held the first of six planned workshops on how communities can make themselves more welcoming
places for young people.
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Interested individuals may learn more, watch an orientation video and apply online at www.ncruralcenter.org.
For more information, contact Barry Ryan at (919) 250-4314 or [email protected].
N.C. Capital Access Program
N.C. Capital Access Program stimulates economic activity by expanding finance options for business statewide.
By reducing risk, NC-CAP encourages banks and other qualified lenders to consider loans that otherwise fall just
outside conventional underwriting standards. The program matches an up-front fee, typically 2 percent to 7
percent, paid by the lender and borrower. The combined amount is deposited into a pooled reserve fund held by
the lender. The pooled fund includes matching fees from all NC-CAP loans made by the institution and cover
losses in the event of a default.
An up-to-date list of participating lenders and other details about the program are available at
ncruralcenter.org. Follow the link to Business Capital on the left-hand menu. Businesses or lenders seeking
additional information may call (919) 250-4314.
N.C. Loan Participation Program
The Loan Participation Program stimulates economic activity by expanding finance options for businesses
statewide. It is designed to increase lending by reducing a lenders risk through the purchase of a portion of an
eligible loan. Lender participation is voluntary Nearly 30 lenders across the state have enrolled in the program.
More are being recruited. Loans generally range from $250,000 to the maximum of $5 million. Only term loans
are eligible.
An up-to-date list of participating lenders and other details about the program are available at
www.ncruralcenter.org. Follow the link to Business Capital on the left-hand menu. Businesses or lenders
seeking additional information may call (919) 250-4314.
New Generation Leaders
New Generation Leaders helps young leaders become more active in the civic and economic life of their
communities, in part through a community improvement project. Challenge grants encourage the formation of
youth and young adult community action teams to design and implement community improvement projects.
The teams recommend actions that focus on making the community a more attractive and welcoming place for
youth and young adults.
Information and application materials will be available at ww.ncruralcenter.org. (See the Find It Fast menu on
the right, and click on “Grant Applications and Reporting Forms.”) For additional information, contact Misty
Herget at [email protected] or at (919) 250-4314
Rural Economic Development Institute (REDI)
REDI prepares a broad, diverse group of rural leaders with the knowledge and skills necessary to manage the
challenges of economic transition in their communities and promote sustained economic and community
development. The institute is packed into nine tightly structured days spread over three months. Each three-day
session includes lectures discussions, learn-by-doing exercises, meals and socials. By participating in the
institute individuals:
? Increase understanding of the latest strategies in economic and community development
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? Improve leadership and team building skills
? Understand more about the resources available to their community and how to take advantage of
them
? Learn the fundamentals of long-range strategic planning and how to make it work
? Join a network of rural leaders who regularly share information and experience
Information and application materials are available at www.ncruralcenter.org. (See leadership & Engagement
on the bottom left, click on “Leadership Training” and then on “2013 REDI Application Brochure.”) For more
information, please contact Misty Herget at [email protected] or (919) 250-4314.
Child Day Care Loan Guarantee Fund
Loans are provided through three participating banks to childcare providers in rural distressed communities to
start or expand childcare facilities. Participating banks include Centura, Bank of America, and Wachovia. The
loan can be used to finance land, building, or equipment needs for start-up or expansion facilities. The program
guarantees 80 percent of the loan amount up to a maximum of $75,000. Loans are limited to 50 economically
distressed counties as designated by the state.
Rural Venture Fund
The Rural Venture Fund (RVF) is a new source of capital specifically designed for qualified businesses in
economically distressed (Tier 1) counties of North Carolina. Investments will carry the expectation of a return,
but on less demanding terms and over a longer period of time than available with more traditional financing.
Target companies for investments will typically be classified as higher risk and in need of capital in the range of
$50,000 to $350,000. The RVF offers a variety of investments from equity to subordinated debt.
Applicants are limited to existing businesses with owner management experience that are located in Tier 1
counties. Eligible businesses must demonstrate future growth and job creation potential and show that the
owner would not receive equity or subordinated debt “but for” this fund.
The RVF will assist clients in the successful management of their long-term growth. Through a collaboration
with the Small Business & Technology Development Center (SBTDC) and the University of North Carolina
System, several business schools will help provide specialized technical assistance to clients (Appalachian State,
East Carolina, NC A&T, NC Central, NC State, UNC Pembroke and Western Carolina.
The Rural Venture Fund began operations with $6.8 million in available capital in late 2007 with funding from
the NC General Assembly ($3.8 million), Golden LEAF ($500,000) and the Rural Center ($2.5 million).
NC Rural Center
4021 Carya Dr.
Raleigh, NC 27610
919.250.4314
Director: Don Stewart
[email protected]
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NC State Small Business Credit Initiative
The NC State Small Business Credit Initiative is helping make capital available for business startups and
expansions across the state. The initiative works primarily through traditional lenders such as banks and credit
unions. By reducing the risks involved, it allows lenders to approve some business loans they otherwise could
not. The initiative also invests in venture capital and angel funds, which in turn make equity investments in
North Carolina businesses.
The initiative is made possible by $46.1 million in federal funding under the Small Business Jobs Act of 2010.
Gov. Beverly Perdue designated the Rural Center to administer the program in all 100 counties.
With three component programs, the initiative is expected to enable more than $600 million in business loans
and equity investments by 2016.
The three components:
The NC Capital Access Program provides matching reserve funds for business loans that are just outside a
lender's usual standards. The average NC-CAP loan is $100,000. When a loan is approved and enrolled in NC-
CAP, the borrower pays a fee, which is matched with money from the program. The funds together are
deposited into a reserve account held by the lender, to offset losses in case of default. Potential borrowers may
apply through their local lenders.
The N.C. Loan Participation Program reduces a lender's risk by purchasing up to 20 percent of a loan. The
program typically assists loans of $250,000 to $5 million. Special consideration may be given for loans to
businesses in underserved communities and to businesses owned by women and minorities. Potential borrowers
apply through their local lenders.
The N.C. Fund of Funds Program has invested $10 million in four venture capital and angel funds, which in turn
invest in North Carolina businesses as early as the conceptual stage: Hatteras Ventures, IDEA Fund, IMAF and
Salem Investment. The individual funds are responsible for finding and assessing potential investments in North
Carolina businesses.
NC Rural Economic Development Center
4021 Carya Drive
Raleigh, NC 27610
Telephone: 919-250-4314
Fax: 919-250-4325
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NC IDEA (Innovative Development for Economic Advancement)
NC IDEA is a 501(c)(3) not-for-profit organization created to serve as a catalyst for young, high-growth,
technology companies in North Carolina. NC IDEA assists entrepreneurial companies with seed and early stage
funding through traditional venture capital, as well as pre-venture stage funding via a grants program. NC
IDEA focuses on helping companies in the following areas: IT software IT infrastructure; materials technologies
and biomedical applications.
Small grants are available to fund “proof-of-concept” business activities that validate potential markets, reduce
business risks, and advance projects to the point at which they are suitable for private equity investment. NC
IDEA will make semi-annual solicitations for ideas with the potential to become high-growth companies, and
award selected projects an amount of up to $50,000.
NC IDEA
334 Blackwell Street
Suite B-015
Durham, NC 27701
919.941.5600
www.ncidea.org
Self-Help – Community Development Financial Institution (CDFI)
Self-Help consists of the non-profit Center for Community Self-Help and two financing affiliates, Self-Help Credit
Union and Self-Help Ventures Fund. Self-Help Credit Union is a federally insured, state-chartered credit union
that provides commercial loans for people who cannot obtain financing from conventional lenders. Self-Help
Ventures Fund provides higher risk commercial financing and develops real estate projects.
Since 1980, Self-Help has invested $5.96 billion in financing to 71,748 families, individuals, and organizations.
For small business lending, since 1980 Self-Help has made $446 million in loans to over 3,000 entrepreneurs,
creating or maintain over 26,000 jobs. Self-Help focuses on segments underserved by traditional loan sources:
minority-owned businesses have accounted for 45 percent of the loan proceeds and women-owned businesses
have received 42 percent of the proceeds. In addition to participating in the SBA 7(a) program, the SBA 504
program, the SBA MicroLoan program, and the USDA Intermediary Relending program, Self-Help also
administers a number of programs in conjunction with other organizations.
Self-Help provides a variety of loan products in the $500,000 to $1.5 million range. It will work with any viable
business but specializes in several industries to better serve firms in these sectors of the economy. Its staged
microloan program helps very small businesses and self-employed people establish their operations with loans
in the $500 to $3,000 range. Self-Help’s Community Facilities Fund provides financing and technical assistance
to small businesses and non-profits that provide human services, such as child care centers or assisted housing
projects. A more recent lending initiative has focused on the sustainable development industry -- firms whose
products or services are environmentally-focused and advocate for policies that promote responsible growth.
Examples include organic farms, ecotourism enterprises, and recycling businesses.
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Special Child Care Business Programs
Self-Help has administered the Department of Health and Human Services (DHHS) Child Care Revolving Loan
Fund since 1992. This loan fund allows Self-Help to offer subsidized interest rates and give special attention to
those working in early childhood education. The funds are available at a 5% fixed interest rate for nonprofit
providers serving subsidized children. Proceeds may be used for working capital, equipment purchase, vans,
renovations, improving star levels, and obtaining licensure. It cannot be used for purchasing a building.
For counties affected by the 1999 flood in the eastern region of the state
6
, Self-Help has special funds available
at a 5% fixed interest rate to purchase land, build facilities, and make major renovations. This program is
available to both for-profit and non-profit providers who serve subsidized children and operate three or fewer
centers. An option available to for-profit providers that want to expand their current location or build new
facilities include loans from the SBA. The product offers low fixed rate financing for the purchase of buildings,
land, machinery, and equipment. Down payments can be as low as 10%.
In addition to its loan products, in the fall of 2002 Self-Help updated its Business Side of Child Care Manual.
This manual is a reference tool for child care advocates, technical assistance providers, and lenders. It provides
a wealth of information on the business aspects of operating a child care center and child care lending. The
manual is available to download free of charge at: www.selfhelp.org/business-and-nonprofit-loans/business-
and-nonprofit-files/business-nonprofit-technical-assistance-
resources/Business.Side.of.Child.Care.Manual.pdf/view?searchterm=child%20care - or hard copies are available
for $10 each from Self-Help. A section on financing child care programs and funding sources begins on page 91.
6
An illustrative map can be obtained from Self-Help. The eligible counties are: Beaufort, Bertie, Bladen, Brunswick, Camden, Carteret, Chowan,
Columbus, Craven, Currituck, Dare, Duplin, Edgecombe, Gates, Greene, Halifax, Hertford, Jones, Lenoir, Martin, Moore, Nash, New Hanover,
Northampton, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Pitt, Robeson, Tyrrell, Washington, Wayne, and Wilson.
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Self-Help -- State Headquarters
301 West Main St.
POB 3619
Durham, NC 27702
919.956.4400 or 800.476.7428
www.selfhelp.org
Lending Offices
ASHEVILLE
34 Wall St., Suite 704
Asheville, NC 28801
800.229.7428
CHARLOTTE
926 Elizabeth Ave., Suite 302
Charlotte, NC 28204
800.394.7428
FAYETTEVILLE
100 Hay St., Suite 300
Fayetteville, NC 28301
910.354.1014
GREENVILLE
301 South Evans St., Suite 306
Greenville, NC 27858
800.893.9669
Good Work, Inc.
This organization offers a long-term, comprehensive business development program that includes
business loans, business training, and on-going support. The loans are provided in association with
Self-Help and can be used for starting or expanding a business in the Research Triangle area. The
program is administered through the formation of small groups called “Loan Circles.” Members of
these Loan Circles can apply for loans starting at $1,000. As circle members repay their loans, larger
loans of up to $10,000 become available. Instead of requiring collateral, Good Work relies on the
support of the circles to ensure that members repay their loans and grow successful businesses. No
member of a Loan Circle can receive funds unless all other members are current with their loan
payments. Since the beginning of the program in 1991, more than 5,000 businesses have been
assisted. In that same period, over $110,000 in loans have been awarded.
Good Work, Inc.
POB 6013
Raleigh, NC 27628
919.817.8507
www.goodwork.org
NC Economic Opportunities Fund / Dogwood Equity
Dogwood Equity was founded in 2002 and is headquartered in Raleigh, North Carolina with a satellite
office in Charlotte, North Carolina. Dogwood Equity is a private equity fund that makes equity
investments in control buyouts and select non-control investments in closely-held companies located in
the Southeastern United States. Dogwood focuses exclusively on the small cap market, which
Dogwood defines as companies with less than $75 million in revenues.
Dogwood's first fund was $74 million and focused on companies in North Carolina. The principals
executed 11 investments in Fund I. Dogwood II targets companies in the Southeastern United States,
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specifically from Maryland to North Florida and east of the Mississippi River. The principals at
Dogwood possess a unique combination of skill sets with over 85 years in economic development,
commercial banking and high risk lending, traditional private equity, leveraged finance and investment
banking.
NC Economic Opportunities Fund (an SBIC)
c/o Dogwood Equity, LLC
4101 Lake Boone Trail, Suite 120
Raleigh, NC 27607
919.256.5000
www.dogwoodequity.com
Business Consortium Fund
The Business Consortium Fund Inc. (BCF) is a not-for-profit minority development company of the
National Minority Supplier Development Council (NMSDC). Forty regional affiliates -- including
Carolinas Minority Supplier Development Council -- work with certified lenders to help finance
expenses or purchases related to a specific transaction. Certified lenders in North Carolina include
Branch Banking & Trust (BB&T), First Charter, and Bank of America.
The BCF was developed to assist ethnic and racial minority-owned firms in accessing working capital
needed to finance growth. The BCF provides contract refinancing to businesses through a network of
local participating banks. The borrower must be a Certified Minority Business in good standing with an
affiliated regional council of the NMSDC. Loans are provided to creditworthy businesses at the current
prime rate. A maximum of $500,000 in total loans per borrower may be outstanding at any one time,
while the minimum is $75,000.
Business Consortium Fund, Inc.
305 Seventh Ave., 20th Floor
New York, NY 10001
212.243.7360
www.bcfcapital.com
Carolinas Minority Supplier Development Council
What is the Carolinas Minority Supplier Development Council? Carolinas MSDC (or the Council) is a
membership organization of major corporations, financial institutions, government agencies, and
universities that operate within North or South Carolina. It promotes and facilitates the development of
business relationships between its members and certified minority-owned business enterprises. The
Council works to expand business opportunities for minority-owned companies in an effort to build a
stronger, more equitable society by supporting and promoting minority business development.
Carolinas MSDC has over 170 corporate members and approximately 425 certified minority-owned
businesses. Find a current list of corporate members at www.carolinasmsdc.org/corporations/cmsdc-
corporate-members/. The Council organizes networking events, educational sessions and unique
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opportunities that serve as venues for MBEs and corporate members to come together and identify
mutually beneficial opportunities to work with one another.
The Carolinas MSDC is a private, non-profit organization categorized by the IRS as 501(c) (3). It is
funded by membership dues, certification fees, and proceeds from program activities. In addition, funds
are also received from the National Minority Supplier Development Council based on allocations by
national members with operations in the Carolinas.
Carolinas Minority Supplier Development Council
9115 Harris Corners Parkway, Suite 440
Charlotte, NC 28269
704.549.1000
www.carolinasmsdc.org
Natural Capital Investment Fund (NCIF)
The Natural Capital Investment Fund (NCIF) makes subordinated debt and equity investments in
environmental and natural resource-based small businesses. Founded in 2001, NCIF is certified as a
"Community Development Financial Institution Fund" (CDFI) by the U.S. Department of the Treasury.
NCIF is affiliated with The Conservation Fund, a national nonprofit organization with a unique dual
mission of land and water conservation and economic development,
NCIF targets start-up to expansion stage companies with market traction and growth opportunities in
the following sectors: value-added and sustainable agriculture, sustainable forestry and forest
products, recycling and water conservation, renewable energy and energy efficiency, eco- and heritage
tourism and natural medicines. NCIF offers $15,000 - $250,000 at interest rates reflecting
subordinated debt, or equity risk in financings up to $2 million. NCIF often partners with traditional
lenders, community development funds and government credit-enhancement programs to help reduce
their risk
Rick Larson
Director of Sustainable Ventures, NC Program Director
[email protected]
Chapel Hill, NC
Phone: (919) 951-0113 | Fax: (919) 967-9702
www.conservationfund.org/our-conservation-strategy/major-programs/natural-capital-investment-
fund/contact-us
The Shade Fund
The Shade Fund is a part of The Conservation Fund. The Shade Fund connects individual lenders with
American entrepreneurs running green, forest-related businesses. These small businesses are critical to
keeping our forests – and the rural communities that depend on them – healthy.
To be eligible for a Shade Fund loan, a business must have access to a commercial bank or credit union
and be willing to help Shade Fund measure the loan’s impact on the business. The Shade Fund
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considers two questions when choosing a borrower: will your business use natural resources
sustainably and contribute to the retention of forests and can your business make good use of a small
loan ($15,000 or less) and repay it?
The Shade Fund also provides an opportunity to support green, forest-related business ventures and
entrepreneurs working to turn sound ideas into reality by becoming a Shade Fund lender.
The Shade Fund
Rick Larson, Director of Sustainable Ventures
919.951.0113
The Conservation Fund
1655 North Fort Myer Drive, Suite 1300
Arlington, VA 22209
Sequoyah Fund
The Sequoyah Fund is an independent, non-profit Native American Community Development Financial
Institution (CDFI). The organization evolved from a loan fund program of the Eastern Band of Cherokee
Indians. The program was managed by the business development department. A decision was made to
take this loan fund program through a rigorous reorganization process and establish an independent
Native CDFI that could receive CDFI certification from the US Treasury. The Sequoyah Fund obtained
this certification in 2005. Loan products include small business start-up loans, business expansion
loans, and loans for façade renovation in the Cherokee Central Business District.
Sequoya Fund
810 Acquoni Rd.
POB 1200
Cherokee, NC 28719
828.554.6720
www.sequoyahfund.org
SlowMoney NC
Slow Money NC has $25,000 available for Slow Money loans. Slow Money is looking to make several
loans to local, sustainable farms or local related businesses to start or expand their businesses.
Slow Money NC lets you reconnect with a portion of the money that you entrusted to strangers in
faraway places and, instead, help build a more local, durable economy from the soil up! When you
make a loan to a farmer or other local food enterprises so they can expand and flourish, you can truly
enjoy the fruits of their labor.
Loan applications can be made at www.slowmoneync.com and questions can be directed to
[email protected].
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The Support Center
The Support Center is a statewide nonprofit and Community Development Financial Institution (CDFI)
that provides small business loans and financial training to start-ups and existing businesses; and
lending services to community-based organizations.
Since 1990, The Support Center has been offering services to create economic opportunities for
individuals, families and entrepreneurs throughout North Carolina. Our primary activities include our
Small Business Revolving Loan program, Policy & Research, and Advocacy for Community Development
Credit Unions.
The Support Center’s Small Business Lending Program is designed to actively reach out to underserved
communities to help emerging entrepreneurs realize their economic goals for business ownership,
expansion and job creation. The Support Center creates opportunities for new and existing business
owners to build economic wealth for themselves and their families while improving communities.
Purposes for the loans may include: working capital, equipment purchase and purchase of commercial
real estate. The maximum loan amount is $250,000 with a minimum amount of $5,000. and the rates
and terms are based on the amount of the loan, collateral and the borrower’s credit.
3120 Highwoods Blvd, Suite 350
Raleigh, NC 27604
Tel: 919.803.1437
Fax: 919.896.8612
For Small Business Loans, contact [email protected]
For more information go to their website at: www.ncmsc.org
The Support Center/Fifth Third Bank Enterprise Loan Fund
The Support Center is pleased to announce a new partnership with Fifth third Bank to create short term
micro-loans and seasonal loans for farmers and small businesses for equipment, expansion, and
working capital. This program was made possible in part by a grant from Fifth Third Bank.
The Support Center/Fifth Third Bank Enterprise Fund will be used to meet the growing demand for
micro-financing and will be a great addition to the current lending programs at The Support Center.
The Support Center has noticed over the last year a great increase of loan requests for micro-loans
between $2,000 and $5,000. For more information, please contact the Small Business Lending team at
[email protected]. (The views expressed herein do not necessarily represent those of Fifth
Third Bank.)
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Local Government Programs
Many towns and counties across North Carolina use Community Development Block Grant (CDBG)
income to form local revolving loan funds and loan guarantee programs. In addition, other sources of
federal and state monies have helped to fund various local business programs and initiatives.
Appalachian Regional Commission
The Appalachian Regional Commission (ARC) is a regional economic development agency representing
a unique partnership of federal, state, and local governments. Each year, the U.S. Congress
appropriates funds that the ARC allocates to projects designed to promote business development
within the region. The ARC allocates funds to finance a revolving loan fund (RLF), which makes loans of
up to $200,000. The Southwestern Commission offers a second loan fund — established under EDA
Title IX guidelines — which closely resembles the ARC’s RLF. However, the RLF funded through ARC
can offer up to $15,000 per job created and is also available in Macon County.
ARC’s goals are:
? Increase job opportunities and per capita income in Appalachia to reach parity with the nation;
? Strengthen the capacity of the people of Appalachia to compete in the global economy;
? Develop and improve Appalachia’s infrastructure to make the region economically competitive;
and
? Build the Appalachian Development Highway System(ADHS) to reduce Appalachia’s isolation.
Southwestern Commission Region A
125 Bonnie Lane
Sylva, NC 28779
828.586.1962
www.regiona.org
Counties: Cherokee, Clay, Graham, Haywood, Jackson, Macon, and Swain
More information can be found at:
www.nccommerce.com/Portals/2/Documents/CommunityDevelopment/ARC/ARCNC4yearplan2
0092012FINAL.pdf#search=%22NC%20capital%20highway%22
Carrboro Revolving Loan Fund
The Town of Carrboro created its loan fund in 1986 for projects that result in the creation or retention
of jobs targeted specifically to persons of low to moderate income. Loans from the fund are made to
private non-profit and for-profit firms for the purchase of capital assets or inventory. The interest rate
charged is based on cash flow projections and other means of documented need. The applicant secures
all loans through an agreement conveying to the town a financial interest in the property the applicant
owns.
Loans from the fund are made to private non-profit and for-profit firms for projects such as construction
or renovation of a building, purchasing existing buildings, the acquisition of equipment, and extension
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of utilities or streets to new sites, parking lots, and inventory. Other potential projects are explored
with applicants as long as it can be shown that new employees will be hired or employees who would
otherwise lose their jobs will be retained.
Town of Carrboro
Community and Economic Development
301 W. Main Street
Carrboro, NC 27510
919.918.7319
www.ci.carrboro.nc.us/ecd/CRLF.htm
Charlotte Communities Within A City (CWAC) Equity Loan Program
The City of Charlotte and participating banks offer loan assistance to new and expanding businesses
located in the city’s targeted business districts, threatened and fragile neighborhoods and in the
uptown loop (I-277). The purpose of the loan program is to provide additional equity to enable
borrowers to qualify for conventional small business loans. The city’s loan can be for as much as 20
percent of the total loan funds (includes bank, city and SBA loans). Borrowers are expected to commit
some of the required equity to qualify for the bank loan.
Repayment of the city’s loan is deferred until the bank’s loan has been paid in full or a determination is
made that the borrower can repay the City’s loan; as a result, the city’s loan is considered an equity
investment. Interest on the city loan begins to accrue at the time payments begin. For each $10,000 of
city loan funds, a borrower will create one new position to assist low to moderate-income persons
living in the CWAC boundary. The maximum city loan amount is $100,000, unless the loan is for
manufacturing, in which case the limit is $150,000. A borrower’s personal tangible net worth cannot
exceed $300,000.
City of Charlotte Neighborhood Development Department
Economic Development Office
600 East 4
th
St., Suite 138
Charlotte, NC 28202
704.336.5849
www.ci.charlotte.nc.us
City of Charlotte – Business Equity Loan Program
The City of Charlotte participating with local banks is offering funding to stimulate small business
investment, create and retain jobs, and provide access to capital to small businesses. Eligible
borrowers include start-up and expanding for-profit service, retail, and manufacturing businesses.
Preference will be given to projects located in the City’s Business Corridor Revitalization Geography. If
a business located outside of this geography wishes to participate must be in one of the following
sectors: health, defense, energy/environment, finance, motorsports, and manufacturing.
A borrower’s cumulative City loan cannot exceed $100,000. There must be a minimum of one job
created or retained for every $65,000 of City loan funds. Principal repayment of the City’s loan is
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typically deferred for one to three years based upon project analysis and underwriting as conducted by
the City. Collateral is required and personal guarantees of all principals is required.
City of Charlotte Economic Development Office
Gail Whitcomb, Business Development Representative
600 East Trade Street, Suite 138
Charlotte, NC 28202
704.432.1414
[email protected]
edo.charmeck.org
City of Charlotte – Business Enterprise Loan Fund
The SBE Loan Fund is an innovative public/private fund established to assist small business with
gaining access to capital. The fund, created in 2003, provides more flexible underwriting guidelines
than that of traditional lenders. Eligible businesses include small businesses that meet the Small
Business Enterprise criteria defined by the City of Charlotte and are located in the Anson, Cabarrus,
Gaston, Lincoln, Mecklenburg, Rowan or Union counties.
The SBE Loan Fund is administered by Self Help. The following public and private entities have
contributed to the SBE Loan Fund: Bank of America, Branch Banking and Trust, City of Charlotte, Fifth
Third Bank, First Citizens, Foundation for the Carolinas, Time Warner, Wachovia Corporation, Piedmont
Natural Gas, RBC Centura Bank, Self Help, SouthTrust Bank, John S and James L Knight Foundation,
and Park Sterling Bank.
Self Help
926 Elizabeth Avenue, Suite 302
Charlotte, NC 28204
704.409.5900
www.self-help.org
City of Charlotte – Façade Improvement Grant Program
The objective of the Façade Improvement Grant Program is to remove blight by assisting businesses
and commercial property owners with improving building appearance and by bringing signs, parking,
and landscaping into conformance with current codes. The program provides 50 percent
reimbursement to commercial or industrial businesses or property owners for eligible renovation costs.
The maximum grant awards are based upon building square footage.
Eligible expenses include architectural renovations, improvements to meet current codes, infrastructure
improvements, and demolition expenses of box buildings. Applicants are responsible for obtaining all
necessary governmental permits and authorizations, including building permits. The City will authorize
reimbursement payment after, among other things, completion of the project in accordance with the
approved plan as set forth in contract, together with occupancy of the building by eligible tenants.
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City of Charlotte Economic Development Office
Gail Whitcomb, Business Development Representative
600 East Trade Street, Suite 138
Charlotte, NC 28202
704.432.1414 / [email protected]
edo.charmeck.org
City of Winston-Salem – Economic Development Revolving Loan Program
Funds are available to businesses within the Winston-Salem Neighborhood Revitalization Strategy Area
or located in the Hewitt Business Center at Old Salem. One job that benefits low-to-moderate-income
individuals must be created or retained for each $35,000 borrowed. The business must also make a
good faith effort to make over half of the jobs created or retained available to low or moderate income
people.
The business net worth cannot exceed $6 million, and net profits must average less than $2 million
during the previous two years. The average loan amount is $50,000. The maximum loan term is ten
years. All loans are secured though collateral at a 75 percent loan to value ratio. Businesses must be
willing to contract for free management and technical assistance if the loan committee deems
necessary.
City of Winston-Salem – Community & Business Development Office
400 West Fourth Street, Suite 400
Winston Salem, NC 27101
336.761.2111
www.cityofws.org/Home/Departments/DevelopmentOffice/SmallBusinessCenter/Articles/LoanProgram
City of Winston-Salem – Target Area Business Assistance Program
Funds are available to encourage businesses to locate within distressed areas of the city in order to
create jobs and increase the tax base in these areas. The business must be within the Enterprise
Community boundaries and more than 20 percent of the buildings in the qualifying area must be either
vacant or below minimum code standards. Assistance can be either a grant or a loan. The amount of
assistance is determined based on job creation and the tax base investment. Assistance may be either
in the form of a grant or loan up to a maximum or $500,000. Amount of assistance is determined by
the number of permanent jobs to be created or retained - $2,000 for each permanent job paying over
$8.00/hour and $1,500 for each permanent job paying less than $8.00/hour but more than $1.00/hour
above minimum wage. An additional $500 credit is available for each job filled by a resident of the
Neighborhood Revitalization Strategy Area. Jobs must be created within 24 months of award and
remain in place a minimum of 72 months. The company must demonstrate that city funds are necessary
for the company to move into or expand within the target area. The company must create or retain at
least four (4) permanent jobs. The company must invest at least two dollars of private funds for every
one dollar of city funds requested
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City of Winston-Salem
400 West Fourth Street, Suite 400
Winston Salem, NC 27101
336.761.2111
www.cityofws.org/Home/Departments/CBD/BusinessDevelopment/Articles/TargetAssistance
MAY Coalition
The MAY Coalition is a non-profit corporation seeking to provide employment opportunities for
unemployed and underemployed residents of Mitchell, Avery, and Yancey Counties. There are two loan
programs available. The first program requires that the business create new, full-time, non-seasonal
employment that pays at least $6/hour. A qualifying business may borrow as much as $250,000,
though one job is generally created for each $20,000 loaned. The second program does not require the
creation of new jobs, but rather was created to enhance low to moderate business owners’ income by
offering loans of up to $25,000. The MAY Coalition charges a fixed rate equal to the prime rate at the
time of the loan (not less than 6 percent), and the borrower must pay the attorney’s fee and all
recording fees. The terms for most loans range to five years.
MAY Coalition
POB 704 / 112 Greenwood Rd.
Spruce Pine, NC 28777
828.765.8880
www.maycoalition.org
Serving Mitchell, Avery, and Yancey Counties
Micro-Enterprise Loan Program of Winston-Salem/Forsyth County, Inc.
(MELP)
MELP is a small business loan program providing services in Forsyth County. Micro-enterprises are
defined as small businesses having less than ten (10) employees, and annual sales of less than
$500,000. In addition to small business loans, MELP offers business education courses, technical
assistance, and mentoring. Individual or group counseling is available, as well as numerous other
opportunities for the growth and development of small businesses.
Micro-Enterprise Loan Program of Winston-Salem/Forsyth County, Inc.
301 North Main St., Suite 2601
Winston-Salem, NC 27101
336.722.9600
cityofws.org/default.aspx?mod=Article&level=290&id=955
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Raleigh Small Business Success Program
This program was formed by the City of Raleigh along with major banks in the city to stimulate
business development and create jobs. The program targets those small businesses located in the
Southeast quadrant of the city. The amount of a loan will range from $10,000 to $75,000, subject to
the availability of funds. The maximum term is five years for a general loan or seven years for a real
estate loan. The loan can be used for working capital, equipment, expansion of business services, start-
up funding, or improvement of owner-occupied commercial property.
Raleigh Small Business Success Program
4030 Wake Forest Road, Suite 205
Raleigh, NC 27609
919.807.8400
www.rada-nc.com/
Optimum Capital Funding
Optimum Capital Funding is a business lending platform specializing in providing commercial loans and
funding solutions for small businesses and mid-size companies.
In the new economy, many companies have difficulty finding the funding necessary for startup or
growth. That’s why Optimum Capital Funding built a network of lenders and funding sources that
understand that solid opportunities exist for small businesses and mid-size companies – if they have
the necessary financial backing.
Led by veteran financial and business professionals who believe in the exceptional capabilities of small
and medium size businesses to launch and thrive in the new economy, Optimum Capital Funding
focuses on providing capital to assist these companies in building solid and successful futures.
Optimum Capital Funding
206 Merrimon Ave., Suite 210
Asheville, NC 28801
855-311-3612 toll-free|828-239-0031 office
www.optimumcapitalfunding.com
ONLINE RESOURCES
Loan Matching Sites
Loan matching sites are online services that take information and attempts to match businesses with
multiple potential lenders. Two of the larger loan matching sites are BoeFly and Lendio. While these
sites provide borrowers with the ability to been seen by multiple lenders quickly after completing one
application, it’s important to remember that these are still traditional lenders with strict requirements,
and individuals must still apply with individual lenders that express interest. In some cases sites may
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connect businesses with brokers and not lenders. For start-up businesses, franchises are the most likely
to find some success via loan matching sites.
Peer-to-Peer Lending (P2P)
Peer-to-peer lending, in which groups of individuals make loans to entrepreneurs through
matchmaking web sites such as Lending Club and Prosper, has gained significant popularity in the last
few years. Most peer-to-peer loans are unsecured personal loans, largely based on personal credit
scores, with a maximum loan amount of $35,000.
The lending intermediaries are for-profit businesses; they generate revenue by collecting a one-
time fee on funded loans from borrowers and by assessing a loan servicing fee to investors
(either a fixed amount annually or a percentage of the loan amount).
Does it cost more to borrow from nontraditional lenders? Often, yes. At Lending Club, for instance,
interest rates range from 6 – 26%, based on an assessment of risk and volatility
.
Peer-to-peer lending
may be useful when small amounts of funds are needed, and banks are not interested in investing at
that level.
Peer-to-Peer Lending Sites
ACCION USA
115 East 23rd Street, 7th Floor
New York, NY 10010
212.387.0377
[email protected]
www.accionusa.org/default.aspx
GlobeFunder Ventures, Inc.
271-A West Centre #211
Portage, MI 49024
888.870.1304
www.globefunder.com
Lending Club
71 Stevenson, Suite 300
San Fransisco, CA 94105
866.754.4094
www.lendingclub.com/home.action
Prosper Marketplace, Inc.
111 Sutter Street, 22nd Floor
San Francisco, CA 94104
866.615.6319
www.prosper.com
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Short Term Business Loans
Some newer web sites are offering short term business loans based on overall business health, and not
just credit scores. One such site, On Deck (www.ondeckcapital.com), offers loans of $25,000 –
250,000 for periods of 3 – 18 months that are repaid through daily debits from the business bank
account (equal daily payments over business days). Requirements include being in business for 1 year
(so no start-ups), annual revenue of over $100,000, and a personal credit score of 500 or more. Their
average loan is a 6 month term with 15% simple interest (APR higher).
PayPal has begun offering short term loans to borrowers selling exclusively through the Internet and
currently managing their revenues via a PayPal account.
Kabbage.com provides advances to help underwrite inventory for eBay, Amazon Marketplace and other
auction sellers.
What most online options have in common is that they are considerably more expensive than bank
loans, and sometimes have terms that are harder to understand. When considering these sources,
make sure to check ratings, get references, and understand the terms and conditions.
Also see Crowdfunding in the Equity Capital chapter on page 117.
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CHAPTER 8: FINANCIAL ASSISTANCE SERVICES
NC Small Business and Technology Development Center
(SBTDC)
The North Carolina Small Business and Technology Development Center (SBTDC) is a business advisory
service of the University of North Carolina System, administered by NC State University, and operated
in partnership with the U.S. Small Business Administration. The SBTDC is also a strategic partner of the
North Carolina Department of Commerce.
The primary focus of the SBTDC is to provide management counseling and educational services to help
North Carolina businesses meet challenges, manage change, and plan for the future. SBTDC specialists
assist small and mid-sized businesses throughout North Carolina from 16 offices across the state –
each affiliated with a college or university. The SBTDC’s core mission is to help North Carolina
businesses grow and create new jobs to benefit all North Carolinians. Most SBTDC services are free of
charge, and all services are confidential.
For further information, visit www.sbtdc.org.
The SBTDC’s General Business Services are well-defined and are designed to meet its clients' needs:
Management Counseling — SBTDC counselors help business owners and managers with financing,
marketing, human resources, operations, business planning, and feasibility assessment. In 2012, the
SBTDC helped clients access over $107 million in financing.
Management Education — The SBTDC also provides targeted, research-based educational products
that are focused on change management, strategic performance, and leadership development for
management teams, employees, and board members.
The SBTDC’s Market Development Services are specifically designed to aid growing companies in
expanding their markets and increasing competitiveness:
Marketing & Research Services — SBTDC specialists provide research and marketing support services
for SBTDC clients, primary research on small business needs and economic impact, and special projects
such as small business incubator feasibility studies.
Government Procurement (PTAC) — SBTDC procurement specialists help businesses secure contracts
by providing comprehensive assistance in selling North Carolina products and services to federal, state,
and local governments. In 2012, the SBTDC helped small businesses in-state obtain more than $119
million in government contracts.
International Business Development — SBTDC helps small to midsized companies with the business
side of exporting, and is North Carolina’s City-State Partner for the US Export-Import Bank.
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Technology Development and Commercialization – SBTDC technology specialists assist technology-
based businesses to commercialize innovative technology. North Carolina’s high-tech businesses
received a total of $56 million dollars in SBIR/STTR funding in 2011.
State Headquarters at NCSU
5 West Hargett St., Suite 600
Raleigh, NC 27601
919.715.7272
[email protected]
www.sbtdc.org
Regional Offices
SBTDC at Western Carolina University
Asheville Office, 46 Haywood St, Ste 212
Asheville, NC 28801
828.251.6025
www.sbtdc.org/wcu
SBTDC at Appalachian State University
130 Poplar Grove Rd
Boone, NC 28608-2114
828.262.2492
www.sbtdc.org/asu
SBTDC at UNC Chapel Hill
1700 Martin Luther King Blvd.,
Suite 115, CB# 1823
Chapel Hill, NC 27599-1823
919.962.0389 or 800.815.8906
www.sbtdc.org/uncch
SBTDC at UNC Charlotte
The Ben Craig Center
8701 Mallard Creek Rd.
Charlotte, NC 28262-9705
704.548.1090
www.sbtdc.org/uncc
SBTDC at Western Carolina University
WCU School of Business, 226 Forsyth Bldg.
Cullowhee, NC 28723-9646
www.sbtdc.org/wcu
SBTDC at NC Central University
G08 Willis Building / 1801 Fayetteville Street
Durham, NC 27707
919.530.7386
www.sbtdc.org/nccu
SBTDC at Elizabeth City State University
K. E. White Graduate Center
1704 Weeksville Rd., Box 874
Elizabeth City, NC 27909-7806
252.335.3247
www.sbtdc.org/ecsu
SBTDC at Fayetteville State University
1200 Murchison Road / POB 1334
Fayetteville, NC 28302-1334
910.672.1727
www.sbtdc.org/fsu
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CAPI T AL OPPORT UNI T I ES F OR SMAL L BUS I NES S ES
SBTDC at NC A&T State University
Nussbaum Entrepreneurial Center
2007 Yanceyville St., Suite 303
Greensboro, NC 27405
336.334.7005 | 828.227.3504
www.sbtdc.org/ncat-uncg
SBTDC at UNC Greensboro
POB 2617
1111 Spring Garden Street
Suite 3708
Greensboro, NC 27402
336.334.5724
www.sbtdc.org/ncat-uncg
SBTDC at East Carolina University
300 East First St.,Willis Building
Greenville, NC 27858-4353
252.737.1835
www.sbtdc.org/ecu
SBTDC at Appalachian State Univ.
Hickory Office
1990 Main Ave SE
Hickory, NC 28602
828.345.1110
www.sbtdc.org/asu
SBTDC at UNC Pembroke
POB 1510
115 Livermore Dr.
Pembroke, NC 28372-1510
910.775.4000
www.sbtdc.org/uncp
SBTDC at NCSU
5 West Hargett Street, Suite 1010
Raleigh, NC 27601
919.600.5999
www.sbtdc.org/ncsu
SBTDC at UNC-Wilmington
601 South College Road, SB 110
Wilmington, NC 28403
910.962.3744
www.sbtdc.org/uncw
SBTDC at Winston-Salem State University
301 North Main Street
9
th
Floor of Winston Towers, POB 19483
Winston-Salem, NC 27110-0001
336.750.2030
www.sbtdc.org/wssu
doc_656622058.pdf