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Alabama Small Business Guide

An introduction to agencies providing services to small businesses in Alabama

Alabama Small Business Development Center Network

The Alabama Small Business Development Center Network (ASBDC) provides management and technical assistance at no cost to existing and potential small business persons statewide. This service is offered through a network of Small Business Development Centers (SBDC) located at member universities around the state. The Alabama SBDC Network also provides technical assistance for capital access, government procurement and international trade through specialty programs. The Alabama SBDC Network is funded in part through a cooperative agreement with the U.S. Small Business Administration.  

Small Business Development Centers are a resource where information, counseling and technical assistance are provided to individuals who plan to start a small business or are presently operating a small business. The centers also provide education and training opportunities on a wide range of business topics and assist small businesses with access to capital and SBA loan programs.  

Participating universities in the Alabama SBDC Network include: Alabama State University, Auburn University, Jacksonville State University, Troy University, The University of Alabama, The University of Alabama in Huntsville, The University of North Alabama, The University of South Alabama, and The University of West Alabama. For more information contact the SBDC nearest you. To find the center nearest you, go to asbdc.org and click on the “Office Locator” button.

Source: An excerpt from “Alabama’s Answers,” the small business development guide published by the Alabama Department of Commerce. Download a copy here

Small Business Fact: Small business owners often report using their homes to obtain capital for their businesses. 

Data show that 22 percent of mature firms relied on home equity to start their businesses, compared with 13 percent of young firms (First Quarter 2012 Small Business Survey, Federal Reserve Bank of Atlanta). Small-business-owning households were more likely to have a home equity line of credit, 18.8 percent versus 10.3 percent of all households in 2010 (compared with 20.4 percent and 12.6 percent in 2007), and were more likely to be borrowing against it than non-business-owning households (Survey of Consumer Finances, 2010).

Alabama Small Business Development Center Network Procurement Program

The Alabama Procurement Program is part of the Alabama SBDC Network and assists small businesses throughout Alabama to sell to the government. Services include:

  • Notifying businesses of government procurement and bid opportunities
  • Counseling businesses on the procurement process and on marketing their products and services to the government
  • Training business owners at workshops on how to sell to the government
  • Providing matchmaking opportunities for businesses to meet with purchasing managers at government agencies and prime contractors

The Alabama Procurement Program counsels firms on doing business with the government. Areas of counseling include bid package preparation, 8(a) and other minority certification programs, proposal preparation, bonding and quality assurance.

Training seminars, held at locations throughout the state, teach business people about the government market and bidding process. Larger procurement conferences provide small businesses the opportunity to network with government agencies and prime contractors.

The program operates a bid match delivery service and local counseling and training assistance through six locations in Alabama based at SBDC offices. Any business in the state can request the free bid delivery service. For more information about the bid-matching service, procurement counseling, or training seminars and conferences, visit the Alabama Procurement Program website and contact a counselor near you: al-ptac.org

Source: An excerpt from “Alabama’s Answers,” the small business development guide published by the Alabama Department of Commerce. Download a copy here

Small Business Fact: Survival rates improve for a given business as it ages. 

About two-thirds of businesses with employees survive at least two years and about half survive at least five years. As one would expect, after the first few relatively volatile years, survival rates flatten out. (Source: Bureau of Labor Statistics, Business Employment Dynamics.)

Alabama International Trade Center

The Alabama International Trade Center (AITC) is a member of the Alabama SBDC Network, operating as a specialty program to assist small businesses to increase international trade. The Center was founded in 1979, as part of the University of Alabama’s outreach service to assist existing industry. The mission of the AITC is to increase the level of export trade activity for small businesses, thereby fostering development and expansion of the economy. Its goals are to: 1) serve existing industry on a confidential, one-on-one basis, 2) assist public and private organizations with trade development by initiating joint projects, researching industries and targeting foreign markets, and 3) further the University’s mission of research and service by focusing on practical international trade education and training. 

The AITC works on a one-on-one confidential basis to help small businesses enter and sell in export markets. Services provided free of charge to small businesses include:

  • Customized international market research to identify foreign customers
  • Targeted export assistance and management training conducted on-site to help small business owners and staff learn the process of exporting
  • Export trade financing to access private and public sector financing for export sales

The Center operates as a federal-state partnership program with the U.S. Small Business Administration, promoting the official SBA trade programs and export financing programs in Alabama. The AITC is a partner with the Alabama Department of Commerce, International Trade Division and its Export Alabama network of export assistance programs for small business. For more information, visit the website www.aitc.ua.edu. 

Source: An excerpt from “Alabama’s Answers,” the small business development guide published by the Alabama Department of Commerce. Download a copy here.

Small Business Fact: Survival paths have not changed much over the years.

A negative economy has little effect on a given business’ survival. Businesses started in expanding economies in 1995 and 2005, those started just before the downturn in 2000, and those started just after the downturn had almost identical survival paths. Source: BLS, Business Employment Dynamics.)

Office of Small Business Advocacy

The Office of Small Business Advocacy (OSBA) is a division of the Alabama Department of Commerce. The mission of the OSBA is to aid, counsel, assist and, as much as possible, protect the interest of small business concerns in order to preserve free competitive enterprise and maintain a healthy state economy. OSBA provides information and assistance to citizens interested in entering into commercial activity.

OSBA fosters the growth of Alabama’s small operations by giving them a variety of assistance. First and foremost, the agency enlists the cooperation and assistance of public and private agencies, businesses and other organizations by disseminating information about their programs and services, identifying educational outreach programs and providing counseling to startup and existing small businesses about local, state and federal programs and services available for small business development.

The Office of Small Business Advocacy works closely with the Alabama SBDC Network and its Small Business Development Centers (SBDC) located at member university partners across the state. In addition, The Office of Small Business Advocacy coordinates its efforts with an array of expert resource partners, which include the Alabama Department of Community Affairs’ Office of Minority Business Enterprise, the Department of Transportation – DBE & SBE programs, the Department of Revenue’s Office of Taxpayer Advocacy, the Alabama SBA District Office, Women’s Business Centers, SCORE, chambers of commerce, business incubators and local economic developers.

For more information contact:
Office of Small Business Advocacy
Alabama Department of Commerce
Alabama Center for Commerce
401 Adams Avenue; Suite 610
Montgomery, AL 36130-4106
(334) 242-0485 or 1-800-248-0033
www.alabamausa.org

Source: An excerpt from “Alabama’s Answers,” the small business development guide published by the Alabama Department of Commerce. Download a copy here

Small Business Fact: Who uses credit card financing, new or existing businesses?

Business owners in all business stages — those starting businesses and those seeking financing to grow their firms — turn to credit cards for their financing needs. Employers and non-employers use credit cards for expansion purposes at similar rates, 14.5 percent and 11.8 percent, respectively. Source: U.S. Census Bureau, 2007 Survey of Business Owners.

Financing through the Small Business Administration

The U.S. Small Business Administration and its nationwide network of partners help millions of potential and current small business owners start, grow and succeed. Resources and programs targeting small businesses provide an advantage necessary to help small businesses effectively compete in the marketplace and strengthen the overall U.S. economy. Through a number of programs, SBA offers assistance with starting a business, financing a business, contracting opportunities, and recovering from disaster. All SBA programs and services are provided on a nondiscriminatory basis. Visit SBA online for small business news, programs and training: sba.gov.

The SBA offers loan guarantees to private sector banks under two primary loan programs called the SBA 504 loan program and the SBA 7a loan guaranty program. The three principal players in each of these programs are – the small business, the bank lender and the SBA. SBA guarantees a portion of the loan and this reduces the lender’s risk of the borrower’s nonpayment.

To qualify for a SBA guaranty loan program, a small business must meet the lender’s criteria and the requirements of the specific SBA 504 loan program or the SBA 7a program. Eligibility requirements, guaranty percentages, interest rates, fees, and use of proceeds vary for each program and are subject to change. For the latest information, please refer to the SBA website and contact your local banker.

The 504 Program gives small business owners access to the same low-cost, fixed-rate, long-term financing that large businesses have through the bond markets. Start-up businesses are also eligible for this program.

SBA promotes this program through certified development companies (CDC). A CDC-financed project can be of any size, but the SBA-backed portion of the loan is usually limited to 40 percent or $5 million ($5,500,000 for small manufacturers). A commercial lender participates in 50 percent of the project in return for first position on collateral. The minimum debenture is $25,000 with typical projects ranging in size from $200,000 to $5 million.

Since most U.S. businesses meet the SBA definition of a small business, chances are excellent that yours will too. To qualify for a SBA loan, your business must be owner operated; for profit; organized as a sole proprietorship, corporation, partnership or LLC; have a business net worth below $15 million and have a net profit after taxes below $5 million in the last two operating years. If your business exceeds these size standards, there are alternate standards based upon number of employees or gross sales under which you may qualify.

The SBA 504 Loan Program offers many benefits to small businesses. They include low down payment (allowing the small business to preserve working capital), longer terms, and larger loan amounts than may be available through a conventional loan. In many cases, the borrower’s down payment will be 10 percent of project costs (15 percent for businesses less than two years old, and 15 percent for special purpose buildings; 20 percent if both). In addition, interest rates on the SBA 504 Loan will be below market and the rate will be fixed for the loan term.

The process of obtaining this type of loan involves submitting a proposal to a certified development company (CDC). They will in turn work with you and your bank or financial institution in order to complete an SBA application. The loan application will then be submitted to the CDC’s loan committee for final approval to send to SBA. Finance specialists from any one of the following five CDCs will assist the small business in packaging the loan application. Several of these CDCs also provide 7a loan assistance.

Source: An excerpt from “Alabama’s Answers,” the small business development guide published by the Alabama Department of Commerce. Download a copy here.

Small Business Fact: The recent recession hit startups of new employer firms particularly hard. 

In the second quarter of 2008, the establishment startup rate (the percent of all firm establishments in a given quarter that did not exist in the previous quarter) fell below 3 percent for the first time since figures were recorded in the early 1990s, and has remained below 3 percent since. The latest startup rate for which data is available is 2.7 percent in the second quarter of 2011. Source: BLS, BED

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