Comstock's magazine 0219 - February 2019 - Page 76

FINANCIAL SERVICES out your savings and max out your credit cards, or ask friends and family to chip in? Is it better to look for partners to invest in the company or apply for a grant? De- pending on the type of company and the stage of its development, chances are that financing will include a combination of all of those options. There is no one-size-fits-all approach to financing. But there are many resourc- es in the Sacramento market that can help a business get the financing it needs to meet its goals. SBA IS THE FIRST STOP FOR MANY Created in 1953, the U.S. Small Business Administration provides training for bud- ding entrepreneurs who need guidance in the basics of organizing a business, from accounting to inventory control. “We pro- vide the help they need to make sure they have a good business plan so when they go to the bank, they have the best chance of getting a loan,” says Miryam Barajas, communications director for the Sacra- mento regional office. “Most of the time, the classes are free and it’s easier than getting the information from a junior col- lege.” In addition to offering business edu- cation, the SBA connects entrepreneurs with lenders. In many cases, it also offers government-backed guarantees for up to 80 percent of a loan, giving banks and other lenders confidence that the loan is a safe investment. “We have partners who have the expertise to help people develop a good business plan and to succeed on their journey,” adds Barajas. The agency’s “boots on the ground” is the Sacramen- to Business Development Center, which receives half of its funding from the SBA, matched by funding from local business- es and the Sacramento Metro Chamber of Commerce. Founded in 2014, the Capital Region SBDC oversees 10 local offices through- out the seven-county Sacramento metro- politan area, helping fledgling companies develop business plans and also playing matchmaker between lenders and entre- 76 | February 2019 preneurs. “We see ourselves as a busi- ness fitness center with expertise to help companies grow,” says Scott Leslie, exec- utive director. “Some people have a good idea, but their projections may be off and they can use a little hand-holding to refine them.” The Center, which added $15 million to the local economy in 2018 and topped $50 million since its inception, also offers a ba- sic, three-hour business course for novic- es. The goal is to help entrepreneurs be as lender-friendly as possible, armed with a solid business plan. Slightly more than half of its clients are looking for loans under $250,000, which is half of the $500,000 cap used to define a small business by the SBA. Its 725 clients in 2018 covered a wide range of ages and interests, from middle-aged engineers looking to strike out on their own after working for a large corporation, to a pair of doctors looking to buy an assisted living facility. SKIN IN THE GAME HELPS Dave Ritchie, CEO of American River Bank, says “there’s a lot of competition to lend” in Sacramento and that he, like other bankers, look for candidates with a track record of business success. “We evaluate the viability of the business to see if they can be successful in the industry they are in,” he explains. He looks for a balance sheet that shows the business has enough equity to absorb a loss in an economic downturn. To make that assessment, Ritchie says he tracks business trends, including sea- sonal industries such as agriculture and construction. It’s important, for example, to know the future of corn or soybeans when evaluating a loan application from a farmer. Steve Fleming, CEO of River City Bank, agrees. “We look for a good credit history and a business with a track record of suc- cess,” he says. As a result, he notes, banks are more often a source of financing for a settled business rather than one that is looking to get off the ground. “A lot of entre- preneurs start with personal savings, family,