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Aid for minority entrepreneurs
Dear Small Biz Adviser:
I live in Alaska and would like to start a sporting goods store.
My town is the hub for 11 other smaller villages and the cost of
goods for hunting, fishing and other recreational pursuits are excessively
high because the stores in the area are small and do not order in
volume. Many people are using the Internet to order goods, but this
can be a hit-or-miss ordeal and up here it can be more difficult
and certainly more discouraging to have to send stuff back. I am
certain (although I do not have a feasibility study to refer to)
that a sporting goods store would be an excellent business opportunity.
I am an Alaskan Native and have heard
that there are opportunities available for minorities. Can you help
me find programs, particularly for economically disadvantaged areas
where there are not many business or employment opportunities, that
I may apply for?
Thanks,
Ian
Dear Ian:
I won't beat around the bush with you. Business loans for start-ups
are very hard to secure, for the very simple reasons that the company
has no track record and the risk inherent in investing in the unknown.
However, that does not mean you don't have opportunity to try or
even succeed.
Story continues below
Before addressing where you can get assistance to
start your venture, let's look at some basic matters you must address.
Your first step is to develop
a business plan. All lenders rely on the business plan as the
means to learn the nature of the business, what market research
indicates the feasibility of a project, the sales projections, an
assessment of the tangible assets, personnel and other operational
needs and the financial projections which show how you will integrate
all of this into a profitable venture.
If you are not familiar with or uncertain of your
ability to develop the business plan, then visit the nearest Small
Business Development Center or SCORE chapter for free, confidential
counseling and low-cost to no-cost workshops on starting a business,
business planning and any other topics that will help you to plan
the startup.
I would then proceed to identify banks or other lenders
identified as certified or preferred by the Small Business Administration
to submit loans to the agency for consideration of a guaranty. In
short, lenders submit such projects, reducing their liability and
risk in that the SBA guarantee will assure the lender of a return
of the overwhelming majority of outstanding principal should you
default on the loan. There are six such lenders in Alaska at this
time.
Specialized assistance programs
Now let us consider assistance programs for Native Americans
and economically disadvantaged areas.
The SBA has an Office
of Native American Affairs. Unfortunately, I notice the absence
of Alaska from any reference materials at that site. The most notable
means of assistance to Native Alaskan business is the 8(a)
Business Development Program designed to create contracting
opportunities with the federal government. Ian, your business will
have to be up and running in order to apply
for this program.
The Alaska
Department of Economic and Community Development appears to
be a more likely source for seeking assistance. In addition to programs
directed to Native Alaskans, it also includes block
grants that address economically distressed communities. However,
as with all community development block grant programs, a local
government agency will have to be involved in the process of developing
your business. You will more likely receive assistance if more than
one business venture in your community seeks the assistance through
the local government agency.
I have read of a loan guarantee program under the
Bureau of Indian Affairs of the U.S. Department of the Interior.
You can call the agency's headquarters in Washington, D.C., at (202)
208-3710 for more information. The Interior Department also has
an Office
of Small & Disadvantaged Business Utilization that you might
want to check out.
Ian, I urge you to take advantage of Small Business
Development Center and SCORE counseling. Thirteen
SBDC centers are located in your state. A link to help you find
a local SCORE chapter is available on that organization's home
page or you can call (800) 634-0245.
I wish you well.
-- Posted: Oct. 3, 2002
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