4 Government Programs Entrepreneurs Are Probably Missing Out On

When I first graduated from business school, I worked briefly as a contractor for the U.S. Small Business Administration (SBA). It was there that I began to realize how many resources are available to entrepreneurs, yet are not widely known within the entrepreneurial community. Here are a few of my favorite hidden gems:

1) SCORE. Previously known as the Service Corps of Retired Executives, this organization does exactly what its former name implied: it is comprised of retired business people who assist small business owners. It is actually  a nonprofit funded by a grant through the SBA. Among all of the government groups I have worked with, I have probably been the most impressed with this group of people. SCORE works through the many district offices of the SBA, and I believe you can look the organization up directly and find an office in pretty much any area of the country. SCORE tries to meet the current needs of your business by providing a consultant with expertise. There is no charge for any consulting services. The people I have met are knowledgeable, attentive and caring. The SCORE groups I have come in contact with all seem to have a real vibrancy to them; it is not a dead organization. The only drawback I have experienced is that SCORE members are not always entrepreneurs, and on occasion I have found their solutions not to be super relevant. However, if you are a contractor or your company does business with the government, you will find this to be a very rich resource.

2)   SBDC’s (Small Business Development Centers). SBDCs are funded in part by the SBA and most of them work in conjunction with universities and state governments. Unlike SCORE, the SBDC offices typically charge a nominal fee for some of their services.  Though they can help you in many different areas, they tend to specialize in writing business plans, obtaining financing and getting government contract work. Sometimes, they will take on slightly different acronyms, as is the case in North Carolina, where they refer to themselves as SBTDCs (Small Business and Technology Development Centers). One caveat of working with both SCORE and the SBDCs is that they tend to be most helpful to existing businesses, rather than true startups that are just getting out of the gate.

3)  MBDA Business Centers (Minority Business Development Agency Business Centers) – MBDA Business Centers are funded by the U.S. Department of Commerce, and they are typically located in large metropolitan cities. Obviously, they help minority-owned businesses, which are businesses that are 51% owned by African Americans, Native Americans, Hispanic Americans and Asian Americans, among others. Unfortunately, although MBDA centers and SBDCs have special programs for minorities, there is not equal attention paid to WBEs (women-owned businesses). I don’t know if it is still the case, but when I worked with the MBDA center program, it seemed a bit insular, and there was not enough emphasis on helping minority-owned businesses to work with other businesses. MBDCs do charge a nominal per-hour fee for services rendered, which is probably a good thing so the business has some skin in the game.

There are a few points of caution that I would volunteer concerning government programs. Sometimes, entrepreneurs think that these government programs are almost like grants, when in fact, the programs really are geared toward management assistance. I don’t know if it is still the case, but we had to do a lot of work to counteract the false impressions that the government programs were giving away free money, or that they were a guarantee of getting government contracts, etc. The way that I view these programs and agencies is as a vehicle to give a new business a boost and some additional resources the business might not have had.

4. SBA Guaranteed Loan Program: I have to mention one example in particular: the SBA has a very low budget, at least relative to other federal agencies and offices (in 2014, the annual budget was around $800 million). Many years ago, the SBA used to lend money directly to businesses. Not surprisingly, this failed spectacularly since the government is not ideally suited to make direct loans. I believe there is still too much misinformation in the market about this. However, the SBA does guarantee or insure small business loans (which is the SBA guaranteed loan program). Through this program, lenders receive up to a 90 percent guarantee for loans they make to small businesses. This is a great deal for the banks, since they make loans almost risk free behind the good faith of the U.S. government, and it is also a wonderful thing for entrepreneurs, who might not otherwise have access to capital. If you are looking for funding and would like to pursue an SBA guaranteed loan, it is important to go to a lender that specializes in these loans. You can waste a lot of time going to lenders who don’t know what they are doing.