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Small Business Development Centers: 5 Common Questions
Published on Apr 30, 2012
Read our article, 'Small Business Development Centers: 5 Common Questions' at 'Time to Start Up,' the small business blog by BizFilings.
Even the most confident and determined small business owner sometimes needs help when it comes to obtaining the funds necessary for a company to grow. Because of this, it's important to develop a strong support system, and many savvy entrepreneurs consider small business development centers a key source of assistance.
1. What are SBDCs?
Small business development centers are run jointly by the U.S. Small Business Administration, state and local governments, educational institutions and private sector companies. Each state has at least one Lead Small Business Development Center that coordinates the program in its area, and there are more than 900 branch SBDCs. Many are located on the campuses of universities, vocational schools or community colleges, or are part of municipal services facilities, such as chambers of commerce or economic development associations.
Each SBDC location employs a staff and recruits business experts from the community to provide services, such as consulting or teaching, to SBDC clients. All services provided at SBDC locations are free and confidential. SBDCs also offer low cost training programs.
2. What services do SBDCs provide?
SBDCs offer classes, workshops, seminars, one-on-one counseling and a variety of other programs related to a wide range of topics relevant to business financing, including:
Drawing up a business plan
Incorporating a business
E-marketing and e-commerce
Taxes and accounting
In addition, SBDCs offer consultations specifically on different small business financing options, ranging from microloans and commercial bank loans to factoring and venture capital. Being associated with the SBA, the centers are an excellent source of information about SBA loan programs, such as:
CAPLines: offers working capital in any amount to help businesses meet short-term and cyclical needs
LowDoc: offers expedited processing of loans up to $150,000
Export Working Capital Program: guarantees private sector loans up to $1 million to provide short-term working capital to exporters
SBDCs are equipped to address practically any question or issue related to the management and administration of a small business, including raising funds; however, each SBDC provides services tailored to its local community and has staff members with particular areas of expertise.
So, for instance, the director of the Northeastern California SBDC has experience in helping clients draft business plans and pro forma projections in order to secure funding. The website of the Illinois SBDC at McHenry County College in McHenry outlines some of the funding assistance common to SBDCs: It provides information and assistance related to loan and grant programs at the local, state and national levels and business funding sources in both the public and private sectors; it maintains records related to grant availability; and it has relevant contacts at the state and federal levels.
3. What kind of businesses do SBDCs assist?
Entrepreneurs who cannot afford to hire a private consultant - including aspiring business owners - are eligible for SBDC programs.
SBDCs assist small businesses of all kinds. In 2009, SBDCs served about 500,000 small businesses, according to the Association of Small Business Development Centers. As of December 2011, the top 10 business types served by SBDCs included fitness/recreational sports centers, full-service restaurants, homes for the elderly, used merchandise stores and landscape architectural firms, according to the SBA National Information Clearinghouse.
Women, minorities and veterans are particularly well served by SBDCs. In 2009, women accounted for 43 percent of SBDC business consulting and business training clients. A third of SBDC business consulting clients were minorities and 9 percent were veterans.
4. How effective is SBDC assistance?
SBDCs offer practical, trustworthy advice and assistance that can have a significant impact on a small business' growth and bottom line. According to the Association of Small Business Development Centers:
$100,000 in financing is secured by SBDC in-depth clients every 17 minutes
SBDC in-depth clients generated upwards of $5.6 billion in new sales in 2008
SMBs that worked with a SBDC in 2007-2008 experienced average sales growth of 17.4 percent, compared to a nationwide average of 3.6 percent
SBDC in-depth clients open a new business every 43 minutes, and more than half of pre-venture clients go on to start a business