LENDER

TYPE OF LENDER

DESCRIPTION

INVESTMENT CRITERIA

Banks,

Commercial Lenders

Debt – Term Loans, Line of Credit,

Credit Cards

Commercial lenders offer term loans to finance working capital, fixed asset purchases, business expansion and/or refinance existing debt.  The lender may require an SBA loan guarantee.

Revolving line of credit is obtained from a bank or on a credit card.  Supplies funds to fill temporary cash shortages.  Typically used to finance working capital, eg. accounts receivable, inventory.

Collateral required.

Generally $5,000 - $100,000.

Collateral required.

Grants

There are no federal government grants for starting a new business.  Grants are generally given to organizations to stimulate or encourage business enterprises.

Incubators

Designed to encourage business start-ups.  They provide workshops, multi-tenant office space, shared office services, and improved access to capital.  Each center provides services to a very specific clientele. 

SBA Basic 7(a) Loan Guaranty

Debt – Term Loan

Serves as the SBA’s primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels. 

Borrower deals directly with a bank or lender.  The bank deals with the SBA.   Generally requires 20-30% equity investment from borrower.

All businesses that are considered for financing under SBA’s 7(a) loan program must:

·          meet SBA size standards, i.e. be a small business - one that is independently owned and operated and not dominant in its field of operation

·          be for-profit

·          not already have the internal resources (business or personal) to provide the financing

·          be able to demonstrate repayment

·          be engaged in, or propose to do business in, the United States or its possessions

·          have reasonable owner equity to invest

·          use alternative financial resources first including personal assets

It should be noted that some businesses are ineligible for financial assistance., eg. nonprofits, gambling, real estate investment firms, lenders.

Interest rates may be fixed or variable:  Fixed rate loans interest rates:

$25k or less/ 1-7 yr. Maturity: up to Prime + 4.25%

$25k or less/ 7+ yr. Maturity: up to Prime + 4.75%

$25k - $50k/ 1-7 yr maturity: up to Prime + 3.25%

$25k - $50k/ 7+ yr maturity: up to Prime + 3.75%

$50k +/ 1-7 yr maturity: up to Prime + 2.25%

$50k +/ 7+ yr maturity: up to Prime + 2.75%

Variable rate loans may be pegged to either the lowest prime rate or the SBA optional peg rate. 

Up to $1.5 million guaranteed.

SBA guaranty:

·          $150k or less:  up to 85% of loan

·          $150k or more: up to 75% of loan

. 

7-25 year maturity.

SBA charges lenders a guaranty fee (2% - 3.75%, depending on loan size) and a servicing fee (.545%) for each loan approved and disbursed.  The lender may charge the upfront guaranty fee to the borrower after the lender has paid the fee to SBA and has made the first disbursement of the loan. The lender's annual service fee to SBA cannot be charged to the borrower.

SBA Microloan, a 7(m) Loan Program

Debt – Short Term Loan

The MicroLoan Program provides very small loans to start-up, newly established, or growing small business concerns. Under this program, SBA makes funds available to nonprofit community based lenders (intermediaries) which, in turn, make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is about $10,500. Applications are submitted to the local intermediary and all credit decisions are made on the local level.

 

 SEE Microlender table below.

Up to $35,000

Up to 6 year maturity

Each lender can have different  investment criteria.

SBAExpress Loan

Debt

Available through select lenders, SBAExpress relies heavily upon the lender’s credit analysis, forms, and procedures..

CommunityExpress, a pilot program, provides small business loans including technical and management assistance for loan recipients. This loan program is designed primarily for businesses in pre-designated geographic serving rural or low-moderate income (LMI) areas of the state.

Patriot Express targets those in the military community who want to establish or expand small businesses.

SBA Express:  Up to $350,000

Up to 50% of loan is guaranteed

Community Express:  Up to $250,000. 

75%-85% of loan is guaranteed.

Patriot Express:  Up to $500,000

75%-85% of loan is guaranteed

SBA Certified Development Company (504) Loan Program (CDC)

Debt – Term Loan

Long-term financing tool - proceeds from 504 loans must be used for fixed asset projects, not for working capital or inventory, consolidating or repaying debt, or refinancing. Generally, the project assets being financed are used as collateral. Personal guaranties of the principal owners are also required.  To be eligible, the business must be operated for profit and fall within the size standards set by the SBA.  SE SBA website for approved CDC’s.

Up to $4 million

SBA Small Business Investment Company (SBIC) program

Equity

SBICs are licensed by the Small Business Administration, are privately organized and privately managed investment firms. They are participants in a vital partnership between government and the private sector economy. With their own capital and with funds borrowed at favorable rates through the Federal Government, SBICs provide venture capital to small independent businesses, both new and already established.  SEE SBIC table below for SBA approved SBIC’s.

$500,000 - $5 million.

Generally require an equity investment in the company.

Private Investors

Equity, Debt

Private or limited stock offerings can raise equity from outside investors without the cost and regulations associated with public offerings.  The private offering must consist of debt and/or equity.  Public stock offerings give the business access to growth capital and give investors a more liquid asset.  These are expensive, time-consuming, and highly regulated.

Colorado Capital Alliance, Inc.

Equity, Debt

Matches private investors with entrepreneurs who need capital:

PO Box 19169

Boulder, CO  80308-2169

Phone:  (303) 499-9646

LENDER/CONTACT

TYPE OF LENDER

ADDRESS/PHONE

WEBSITE/E-MAIL

US Bank, N.A.

Debt,

SBA 504 ,

SBA Express,

SBA 7(a) programs

730 Colorado Blvd.
Denver, CO 80206

Phone:  (303) 394-7073

FAX:   (303) 399-2809

www.usbank.com

Debt,

SBA 504 ,

SBA 7(a) programs

3033 East First Avenue

Denver, CO  80206

Phone:  (303) 394-5073

FAX:  (303) 388-7382

Wells Fargo Bank

Debt,

SBA 504 ,

SBA Express,

SBA 7(a) programs

633 17th St.
Denver, CO 80270

Phone: (303) 721-6378

FAX:  (847) 574-1396

www.wellsfargo.com

JP Morgan Chase Bank, NA

Debt,

SBA 504 ,

SBA Express,

SBA 7(a) progra

1125 17th St
Denver, CO 80202

Phone:  (303) 244-3283

www.chase.com

Premier Bank

Debt,

SBA 504 ,

SBA Express,

SBA 7(a) programs

1630 Stout St.

Denver, CO 80202

Phone:  (303) 623-8888

FAX:  (303) 623-8505

www.premierbankusa.com

LENDER/CONTACT

TYPE OF LENDER

DESCRIPTION

ADDRESS/PHONE

WEBSITE/E-MAIL

FUNDING STAGE

INVESTMENT CRITERIA

Colorado Enterprise Fund

Micro-Loan Lender, SBA 7(m) Loan Program

Non-profit community development financial institution founded in 1976. Help people start or expand their small businesses.  Make loans to businesses that can’t get financing from traditional sources. Serves Denver, Adams, Arapahoe, Boulder, Douglas, Jefferson, Larimer, Weld, Elbert, and El Paso counties.

1888 Sherman St, Ste 530

Denver, CO  80203

Phone:  (303)860-0242

FAX: (303) 860-0409

www.coloradoenterprisefund.org

E-mail: microloans@coloradoenterprisefund.org

Early,

Later,

Growth

$1,000 to $150,000,

Current interest rates range from 10% to 13% per year,

Loans may be amortized up to 6 years

Aurora Business Development Center

Contact:  Chuck Hahn

Mico-lender (non-SBA)

Serves city of Aurora, particularly Original Aurora (zip codes 80010, 80011 and 80045).

Also provides SBA Community Express Loans to borrowers from any location through three lenders for lower to moderate income areas and minority-owned businesses.

9810 E. Colfax Ave., Suite 200
Aurora, CO 80010-2154
 

Phone:  (303) 326-8690

Fax: (303) 361-2953


 

www.aurorabdc.com

E-Mail: info@aurorabdc.com

Later, Growth

$5,000 - $75,000

$5,000 - $50,000

E-mail:  accion@accionco.org

Early,

Later,

Growth

LENDER/CONTACT

TYPE OF LENDER

DESCRIPTION

ADDRESS/PHONE

WEBSITE/E-MAIL

FUNDING STAGE

INVESTMENT CRITERIA

Appian Ventures SBIC I, L.P.

Contact: Phillip Dignan

SBIC Licensee,

Equity

Invests in software and technologies that enable Applied Connectivity - the application and management of network connectivity to improve business performance.

1512 Larimer Street, Suite 200

Denver, CO  80202

Phone: (303) 830-2450

FAX: (303)  830-2449

www.appianvc.com

E-mail: admin@appianvc.com

Seed -  10%, Early - 70%, Growth - 20%

$500,000 - $5 million

CapEx L.P.

Contact: Jeffrey Ross, Manager

SBIC Licensee, Debt, Equity

Provides mezzanine debt and equity capital to companies that are historically profitable, have exceptional growth prospects and can benefit from their involvement.

518 Seventeenth Street

17th Floor

Denver, CO  80202

Phone:   (303) 869-4700

Fax:         (303) 869-4602

www.capexsbic.com

E-mail:  info@capexsbic.com

Growth,

Later Stage

$2 million –

$5 million

Hanifen Imhoff Mezzanine Fund, L.P.

Contact:  Edward C. Brown, Manager

SBIC Licensee,

Debt, Equity, Preferred Stock,

Common Stock

Provider of mezzanine & equity capital to small & middle market companies (revenues of $10 million+, EBIT $2 million+). 

Industries: Niche Manufacturing, and Service.

1125 17th Street, Suite 2260

Denver, CO  80202

Phone:        (303) 297-1701

Fax:              (303) 297-1702

www.rockycapital.com

E-mail: info@rockycapital.com

Later  Stage,

MBO,

LBO, Acquisition,

Growth

$3 million –

$7 million

Roaring Fork Capital SBIC, L.P.

Contact: Eugene McColley

SBIC Licensee, Equity

Focus: orphaned microcaps. Roaring Fork defines orphaned microcaps as public companies with market capitalizations of $140 million or less that have been neglected by the financial community. The Fund typically obtains a material ownership percentage of 5% or more.

8400 E Prentice Avenue, Suite 745 Greenwood Village, CO 80111

Phone: (303) 694-1300

Fax: (303) 694-1181

(Branch Office)

24 S. Weber, Suite 345
Colorado Springs CO 80903

 

Phone:  (719) 635-3464
FAX:  (305) 425-2757

www.roaringforkcapital.com

E-mail: jfandal@roaringforkcapital.com

Later stage

$1.5 million - $2 million

Phone: (303) 831-4174
FAX: (303) 758-3885

Vista Ventures Advantage, LP

Contact: Catharine M. Merigold

SBIC Licensee,

Equity

Invests in early- and growth-stage IT, communications and media and data services companies that provide unique products and services, and that have the potential to become market leaders. Also invests in enabling technologies that are revolutionizing an array of traditional industries.

1011 Walnut Street, Suite 410 Boulder, CO 80302

Phone: (303) 543-5716

Fax: (303) 543-5717

(Branch Offices)

1011 Walnut Street, 4th Floor
Boulder, CO 80302
Phone:  (303) 543-5716
FAX:  (303) 543-5717

315 West Oak Street, Suite 504
Fort Collins, CO 80521
Phone:  (970) 495-1800
FAX:  (970) 495-6757

www.vistavc.com

E-mail:  info@vistavc.com

Early,

Growth

$1 million - $5 million

ENTITY

MANAGE-MENT

RISK

DOCUMENTS FILED

OPERATING DOCUMENT

TAXES

Sole Proprietorship

Owned and operated by single individual: Sole Proprietor

Unlimited personal liability

·          If operating business under a name other than own full first and last legal names, then must register as a trade name with Sec of State

N/A

·          Income taxed to Sole Proprietor. 

·          Owner must pay self-employment taxes.

·          Option for Unemployment Taxes and Workers Compensation Insurance for owner

·          Can deduct portion of medical insurance.

·          Can deduct retirement plan.

General Partnership

Owned and operated by two or more individuals or business entities: General Partners;

Unlimited liability for partners, no matter what partnership agreement specifies as split.

·          If operating business under a name other than their own legal names, then must register as a trade name with Register Business with Sec of State.

·          If partnership owns property, Partnership Agreement should be filed in the county where property is located (real estate records office)

·          General Partnerships can change to LLP’s

Partnership Agreement

·          Income taxed to Partners. 

·          Distributions to Partners generally not taxable. 

·          Partners must pay self-employment taxes..

·          Option for Unemployment Taxes and Workers Compensation Insurance for partners.

·          Can deduct portion of medical insurance.

·          Can deduct retirement plan

Corporation

Director(s) and Officer(s)

Limited risk for shareholders; officers liable for wrongful actions

·          Register trade name with Secretary of State 

·           Articles of Incorporation w/ SOS

·          Corporate report filed every 2 years w/ SOS

·          Must hold regular meetings and keep written corporate minutes

·          Must hold annual meeting of stockholders

Bylaws

·          Income taxable to the Corporation. 

·          Dividends to Shareholders taxable as ordinary income.

·          No self-employment taxes as long as shareholders earn reasonable compensation for activities as an employee.

·          Can deduct  medical insurance.

·          Can deduct retirement plan

·          Unemployment Taxes, FICA/medicare Taxes  and Workers Compensation Insurance for employees are deductible

“S” Corporation

Director(s) and Officer(s)

Cannot have more than 100 stockholders, each citizen or resident of U.S.

Limited risk for shareholders; officers liable for wrongful actions

·          Register Trade name with Secretary of State

·            Articles of Incorporation filed w/ SOS

·          File form 2553 with IRS for Subchapter S election.

·          Corporate report filed every 2 years w/ SOS

·          Must hold regular meetings and keep written corporate minutes

·          Must hold annual meeting of stockholders

Bylaws

·          Must pay unemployment and worker’s compensation for employees. 

·          Portion of medical plan may be deductible. 

·          An owner/employee of an S corporation is treated both as a shareholder and an employee. In this dual-status role, the owner can receive a wage (as employee), and a share of corporate income or dividend (as shareholder).  Both the wage and the owner’s share of corporate income are subject to the income tax; however, only wages are subject to the social security and Medicare taxes. An S corporation shareholder should not attempt to evade the payroll tax through the receipt of an excessive distribution in exchange for unreasonably low wages.   Wages can be based on the amount it would cost to hire someone for the position.

Limited Partnership (LP)

Family Limited Partnership (FLP)

Two or more persons, with at least one General Partner and one Limited Partner

Limited partners have limited liability

General Partners have unlimited liability

·          File Certificate of Limited Partnership with SOS

Partnership Agreement

·          Income taxed to Partners. 

·          Distributions to Partners generally not taxable. 

·          Partners must pay self-employment taxes..

·          Option for Unemployment Taxes and Workers Compensation Insurance for general partners

·          Can deduct portion of medical insurance.

·          Can deduct retirement plan

FLP:

·          Assets held in the FLP are effectively shielded from potential claims.

·          Income taxes can be shifted to lower bracket family members or entities such as corporations and trusts to take advantage of deferral and savings techniques.

Estate taxes on accumulated wealth and future appreciation can be minimized or eliminated by gifting discounted interests in the FLP to children or trusts established for their benefit.

Limited Liability Partnership (LLP)

Owned by two or more individuals or other business entities: Partners

Limited liability in Colorado for partners. 

No liability protection in states without LLP statute. 

·          Register Trade Name with Secretary of State

·          File Registration Statement w/ SOS

·          General Partnerships can change to LLP’s

Partnership Agreement

·          Taxed as partnership unless elect to be taxed as corporation.

·          Income taxed to Partners. 

·          Distributions to Partners generally not taxable. 

·          Partners must pay self-employment taxes.

·          Option for Unemployment Taxes and Workers Compensation Insurance for General Partners only.

Limited Liability Company

Operated by Managers and owned by Members.  Members may elect to be Managers.

Limited liability in Colorado for members and managers;  Managers are liable for wrongful actions.

·          Register Trade name with Secretary of State

·           Articles of Organization w/ SOS

Operating Agreement

·          If single Member, then treated as sole proprietorship for income tax purposes unless LLC elects to be treated as a corporation.  If multiple Members, then taxed as a partnership unless elects to be taxed as a corporation.

·          An LLC can neither “employ” its members, nor pay them “wages.”  Instead, members are taxed on their shares of LLC net income.  In addition, all of the LLC’s trade-or-business income may be subject to SE tax.   Members, however, generally can receive distributions tax-free.  A strategy is available to LLC members, however, that can reduce exposure to the SE tax. One essential element of this strategy requires that the owner be issued two classes of interest: a managing interest, and a non-managing interest. In appropriate circumstances, these interests will be respected as distinct, so that the income from each will be treated separately, and the income attributable to the non-managing interest can escape the SE tax. For this strategy to succeed, several requirements must be met. – consult tax specialist.

·          Managers must pay self-employment taxes.

·          Can deduct medical insurance.

·          Can deduct retirement plan.

·          Must pay unemployment taxes and workers compensation insurance for employees