Preparing Yourself for Capital in 2010

We begin with good news and bad news, glass half empty, glass half full.  Nevertheless,  if you’re thirsty and have innovative business ideas, you should be drinking something in 2010.

Good news first. The U.S. Senate extended two stimulus-era provisions that reduced fees and boosted guarantees on existing Small Business Administration loans. So if you’re already in the pipeline and meet the criteria, financing will be readily available for you as an entrepreneur.

But umm, here’s the bad news, Small Business Loans decreased by more than 50% in 2009 and small business bankruptcies are also up, which makes lending institutions more squeamish about new and untested ideas.

Banks are also still tight on lending going into next year.

So how does one drink? Well, by preparing to drink. A potentially viable alternative to small business loans from government entities is venture capital companies, which are known for start-up loans and business incubation.

There are hundreds of thousands of VC firms all over the world so now that you have your idea and you’ve decided that you want to drink in this recession no matter the weight and girth of the glass, it’s time to whet your taste buds.

As you prepare to drink from the proverbial well of financing, you should pick an area of specialization and research VC firms that are either looking for or have looked for investments in your area of expertise or business niche.

The funding may not be available now as these are uncertain times but contacting the VC’s that interest you, perhaps even setting up an informational interview over the phone or via e-mail is not only prudent but free and you can practice your pitch with nothing to lose and tell your potential investors heartily to “keep me in mind.”

But before you do this, the first step is honesty. Would you buy your own product or service? Are you just in the idea stage or have you been actively canvassing for funding? Will that funding be a source of  early revenue for you or just be operating capital to continue to build your business, which is already taking in a little coin?

Have you exhausted traditional loan channels such as banks and finance companies? Have you done your homework on the nature and viability of your business? Be honest and you will be prepared to sip on a little something.

About the Author
Jabulani Leffall, 33, is an award-winning journalist and writer who attended Journalism School at the University of Missouri. His work has appeared in the Financial Times of London, Dow Jones Marketwatch, The Baltimore Sun, Investor's Business Daily, Variety, CFO Magazine, Compliance Week, Redmond Magazine, Black Enterprise, the Los Angeles Business Journal and the Los Angeles Daily News among other publications. He has been a George Washington Williams Fellow for the Independent Press Association where from 2002 to 2004 he studied the effects of subprime lending on poor communities. After what happened in 2007 and 2008, he feels vindicated as a journalist for having called what was going to happen. What else? Yeah, he also contributed vital research to the 1998 book University of Missouri History Professor Robert E. Weems, which is titled "Desegregating the Dollar." Additionally, he has appeared numerous times on ABC World News and CNN as a commentator of business and world affairs, again pretending to know what the heck he is talking about. Mr. Leffall is currently a the Associate Editor of Special Projects and content with FactSet Research Systems News and Media Relations Group. Lastly for the part where Mr. Leffall lives, he resides in a four cornered room where he stares at candles and his mind plays tricks on him. Read his articles and blogs please lest he go completely mad.
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