American Entrepreneurship Today is pleased to present our Q&A series with key participants of the entrepreneurial ecosystem.
What is UCEDC’s mission and what types of companies do you serve?
If you own a small business in New Jersey or are just thinking about taking the plunge, UCEDC can help you start, grow and thrive. We’re a private, non-profit economic development corporation and SBA lender, dedicated to business development and job creation. Since 1977, we’ve been helping small businesses by making loans, training and mentoring business owners, and helping businesses obtain government contracts. We work with the full gamut of small businesses, from start-up, home-based operations to generations-old manufacturing companies, all with the goal of building sustainable, profitable entities.
How does your micro-lending service differ from banks and other lenders?
While we started out as a micro-lender and still consider that program to be the keystone of our lending operations, we’ve added other SBA products to our portfolio, allowing us to meet the needs of small businesses at every stage of their growth.
With all of our loan programs, our objective is to provide access to capital to underserved populations and communities. We step in when you can’t get the funding you need through conventional lending sources, like banks, with loans from $500 to $5 million.With a wide array of financing options, including SBA microloans, Community Advantage 7a loans, and 504 loans, we are often the answer for borrowers with little to no credit history, low-income borrowers, women and minority entrepreneurs, and start-up and early-stage operations.
How do your loan products meet the needs of the state’s entrepreneurs?
Microloans:Our SBA Microloan product has been around the longest – it was designed to help start and grow small businesses and in fact, we can lend money to entrepreneurs for pre-venture financing. Banks typically will not lend money to a business that is less than three years old.
It’s a fixed rate, six-year loan that goes up to $50,000 ($35,000 for those operations in business less than two years) that can be used for a variety of purposes, including the purchase of equipment or inventory and working capital.
Community Advantage 7a:If you have big plans for your small business, our SBA community Advantage 7a loan program may be the answer.
Long-term loans of $50,000 to $250,000 are available to start-up (in operation less than two years) and established businesses. With low down payments and flexible collateral requirements, Community Advantage 7a loans can help you grow your business when you can’t qualify for conventional financing
Proceeds can be used to buy a business, purchase land/building, make renovations, buy inventory or equipment, or as working capital.
504 Commercial Real Estate: Owning rather than leasing a building makes financial and operational sense for many small businesses, but typically, an entrepreneur has to come to the table with 25 – 30% of the total project cost in cash. With our SBA 504 Commercial Real Estate loan program, you can purchase, construct or renovate your own building with as little as 10% down!
What’s more, you can roll your closing costs, attorney fees, environmental studies, etc into the loan, reducing your need for cash even further. And you enjoy the peace of mind of a long-term fixed rate. The 504 loan program goes up to $5 million.
What is the best way for an entrepreneur to prepare to use an alternative lender, like UCEDC?
The first thing to do is to clean up your personal credit history – a start-up business doesn’t have a track record for us to look at, so all we have to go on is how you, the business owner, have handled your finances. So clean up past due bills, resolve any disputes you have, etc.
Be prepared to have some skin in the game – we ask our borrowers to finance at least 10% of the project cost themselves. If you won’t invest in your business, why should we?
Be sure to prepare a clear, realistic business plan that also shows your passion for your business idea. The Business Plan is an essential element in our consideration of applications from start-up businesses. It’s the best way for us to get a deeper understanding of your business and to assess its financial viability.
Don’t be intimidated by the prospect of writing a business plan – it doesn’thave to be long or complex or have fancy graphics. We’re just looking for evidence that you’ve thought through how your business is going to operate and make a profit.Common elements of a business plan include descriptions of your business, the marketplace you’re entering and the competition you’ll encounter; how you’ll organize your business; and financial projections.
What other services does UCEDC provide for entrepreneurs?
Our Entrepreneurship 101 course is an intensive, six-week program for pre-venture and early-stage businesses. The difference between a successful small business and the ones that crash and burn is the work that is put in by the owner to realistically determine if the business will succeed. The excitement that comes with entrepreneurship needs to be tempered by due diligence before you move forward in your venture.
This six-week course will test your personal readiness, guide you through the early stages of the entrepreneurial process and give you the tools to provide you with the best chance to turn your business idea into a success. Plus, graduates of the program get a year of free individualized business coaching/mentoring from UCEDC’s business experts.
