Financing Your Business
Planning on buying a business in Florida? You’ll need funds to buy a Florida business. Knowing the most efficient and cost-effective way to generate funding can make or break your revenue stream.
Savings, Credit Cards, Home Equity
If you aren’t confident enough to put your own money on the line to finance your business, who will? Be prepared to tap into your savings or money market accounts, cash out your stocks, sell your boat, even secure a home equity loan, if necessary. Many small businesses charge their way through the first year or two of operation. If you choose this path, tread carefully: use only cards with favorable interest rates, read all terms and conditions up front, monitor due dates and make every payment on time. Many credit card companies will lower your interest rate for a limited time if you just call and ask them to.
Look for groups that work with investors, such as the University of Central Florida Venture Lab. Network with friends and business associates and industry insiders in your specific field. For example, if you are launching a landscape or nursery business, consider joining the Florida Nursery, Growers and Landscape Association to meet with like-minded people; some of them might share your vision and be willing to invest your business plan.
SBA Loan Programs
U.S. Small Business Administration (SBA) loans are made by commercial lenders (banks or credit unions); in return, these institutions receive a federal-government guarantee for part of the loan.
When a financial institution reviews a loan application, regardless of whether that loan is guaranteed by the SBA, the primary deciding factor is an applicant’s ability to repay the loan. While good character, proven management ability, collateral and significant owner equity in a business are all important considerations, they carry less weight than demonstrated ability to pay the money back.
7(A) Loan Program Includes financial help for businesses with special requirements, such as those involved in exporting to foreign countries or operating in small communities and rural areas, and for other very specific purposes.
CDC/504 Loan Program Provides long-term, fixed-rate financing to acquire fixed assets for expansion or modernization by for-profit businesses with a tangible net worth of less than $15 million and an average net income of $5 million or less after federal income taxes for the preceding two years. The money may be used for fixed assets such as land, buildings, machinery and equipment. Funds cannot be used for working capital, inventory, debt consolidation, repayment or refinancing.
Microloan Program Provides small, short-term loans to small business concerns and certain types of not-for-profit childcare centers. The SBA makes funds available to specially designated intermediary lenders, which, in turn, make loans to eligible borrowers. These intermediaries are nonprofit, community-based organizations with experience in lending as well as management and technical assistance. The average microloan is about $13,000; the maximum is $50,000. Microloans may be used for working capital and to purchase inventory, supplies, furniture, fixtures and machinery or equipment. Proceeds from a microloan may not be used to pay existing debts or to purchase real estate.
Florida Business Brokers Leverage Your Buying Power with an SPE. An SPE is a Special Purpose Entity that is set up as a limited partnership in order to acquire an existing business with the use of investment money. Typically, a prospective buyer only needs to put in 5-10% of the cash needed to complete the acquisition. The buyer may also receive a larger percentage of ownership in the company and a position in management, which may also draw a salary and a management fee.
Florida Business Brokers
The U.S. Small Business Administration does not make loans directly to small business owners; however, many local lenders can assist with the application process for an SBA-backed loan. For information, contact one of the SBA district offices in Florida.
• Miami District Office (South Florida)
• Jacksonville District Office (North Florida)
Certified Development Companies
These nonprofit corporations work with the SBA and private-sector lenders to provide financing to small businesses.
• Business Development Corporation of Northeast Florida
• Coastal Area District Development Authority
• Essential Capital Inc.
• Florida Business Development Corp.
• Florida First Capital Finance Corp.
(850) 681-3601 or (888) 320-5504
• Independent Development Services Corp. (IDS)
• St. Petersburg Certified Development Corp. (dba Gulfcoast Business Finance Inc.)
(727) 895-2504 or (800) 850-2504
• Tampa Bay Economic Development Corp. (TEDCO)
Industrial Revenue Bonds
Industrial Revenue Bonds, issued by the Florida Development Finance Corporation (FDFC), offer tax-exempt, low-interest bond financing to qualified, financially sound manufacturing and 501(c)(3) nonprofit organizations.
Enterprise Florida Inc.