SBA primer: Programs that can help you

Kim Adams and Troy Adams did engineering work at Atlantic Concrete in Cheswold. They own Mountain Consulting, a professional engineering firm in Dover. The Adamses receive no-compete contracts under a nine-year SBA program that aims to help disadvantaged business owners. // Photo by Brian Harvath
Kim Adams and Troy Adams did engineering work at Atlantic Concrete in Cheswold. They own Mountain Consulting, a professional engineering firm in Dover. The Adamses receive no-compete contracts under a nine-year SBA program that aims to help disadvantaged business owners. // Photo by Brian Harvath

By Kathy Canavan

Delaware is no longer Uncle Dupie’s state. While the DuPont Co. still employs 7,000, small businesses are creating more than 5,000 jobs a year here.

Half of the state’s private work force now gets paychecks from small businesses.

There are 73,934 small businesses in Delaware – companies that have fewer than 500 employees or less than $7.5 million in average annual receipts. They make up almost 93 percent of all businesses here.

Who starts what in Delaware? According to U.S. Census Department figures, the most common industry for female entrepreneurs here is health care and social assistance. For male entrepreneurs, it’s construction. Most white and Hispanic entrepreneurs also choose construction. African-Americans choose health care and social assistance. Asian entrepreneurs choose professional, scientific and technical services.

The Small Business Administration and its partners – SCORE, the University of Delaware Small Business Center and the Women’s Business Center at First State Community Loan Fund – provide help for anything from writing a business plan to taking your product overseas. Most programs are free; a few charge nominal fees.

The SBA offers loan guarantees for up to 90 percent of a commercial loan through any of its approved lenders.  That credit enhancement can tip a bank’s loan decision in favor of lending money to a fledgling business. The SBA guaranteed more than $1.11 million in Delaware loans in the year ended Oct. 1.

The SBA is also the small businessperson’s Sherpa to finding government programs that could help their bottom line. An example: Kim and Troy Adams of Mountain Consulting in Dover went from $80,000 in commercial professional engineering contracts last year to almost $4.5 million in federal contracts under the SBA’s 8A program and almost $2 million under the SBA’s HUB Zone program this year.

“It’s not easy, but, if you hang in there and keep pursuing it, it will pay off,” Kim Adams said. “I think it’s pretty great to get $4.5 million in my first year in the 8A program. The potential is huge. As long as we keep up performance and keep the clients satisfied, we should do pretty good.”

Here’s a primer of what’s available from the SBA and its partners:

If you’re just starting out

• Small Business Development Centers offer one-on-one expert business counseling, low-cost training export assistance, regulatory compliance assistance and other services. Call SBDC offices at (302) 831-1555 in Newark or (302) 856-1555 in Georgetown.

• SCORE will match you with a business mentor from your industry or a similar industry for practical business-building insights. SCORE offers business counseling and workshops like Fundamentals of a Business Plan. Call (302) 573-6552 in New Castle County, (302) 542-3772 in Sussex or (302) 661-2366 in Kent.

• Female entrepreneurs can turn to SBA for help determining whether they qualify for set-asides for contracts to eligible women-owned businesses and economically disadvantaged women- owned small businesses in industries where they are underrepresented. SBA Delaware’s government contracting specialist Gedell Hawkins can be reached at (302) 573-6294, Ext. 226; or Gedell.hawkins@sba.gov for information on those programs. SBA offers business counseling and support to women seeking to grow their businesses through its WeThink Program, a think-tank-style program for female entrepreneurs. SBA Delaware’s Ellyn Herbert,  a WeThink program founder and SBA Delaware’s woman-owned business representative, can be reached at (302) 573-6294, Ext. 228; or Ellyn. herbert@sba.gov.

The SBA-backed Women’s Business Center at First State Community Loan Fund provides business training for entrepreneurs at every stage of business development. Many offices are open evenings and weekends, and counseling is available online. The WBC is located at First State Community Loan Fund, 100 W. Tenth Street, Suite 1005. (302) 652-6774.

• Veterans are eligible for breaks on SBA loan fees, and the federal government has a goal of awarding at least 3 percent of prime and subcontracting expenditures to service-disabled veteran-owned small businesses each year. Jim Provo, the SBA’s veteran’s business development officer, can help determine whether you are eligible for this set-aside. He can be reached at (302) 573-6294, Ext. 227. SBA programs for veterans include classes, counseling and Operation Boots to Business, a free program to for those transitioning out of the military. It explains the resources available entrepreneurs – from loans to technical assistance.

• The SBA also offers programs for Native American business development, franchise buyers, young entrepreneurs and encore entrepreneurs – retired people who want second acts in business. For more information, go online to SBA.gov or call the Delaware District Office at (302) 573-6294.

Finding funds

• When the bank balks at your loan application, an SBA guaranty might make a difference. The 7A loan program, the SBA’s basic business loan program, is really a guaranty program. The SBA guarantees a portion of your loan so the bank will be repaid partially in the event you default. This often tips the bank’s decision in your favor. SBA guarantees a gross loan amount of up to $5 million.    There are no fees on loan less than $150,000, and that bumps up to $350,000 if the owner is a veteran.

• The 8A Business Development Program helps disadvantaged businesses – firms owned and controlled by socially and economically disadvantaged individuals. The nine-year business development program helps 8(a) firms  gain a foothold in government contracting because they are eligible for sole-source and set-aside federal government contracts up to $4 million for goods and services and $6.5 million for manufacturing.  Participants also have access to counseling, bonding assistance, SBA loans, business training, marketing assistance, executive development training and surplus government property and supplies.

• The 504 loan program supports economic development in communities by offering loans to small companies with net profit after taxes under $5 million that create jobs, generate renewal energy or meets a specific public policy goal such as rural development or expanding businesses owned by women, veterans or minorities. For more information, visit www.sba.gov/504

• The SBA’s microloan program provides very small loans of up to $50,000 to women, low-income, minority, veteran and other small business owners through nonprofits. Micro-loans cannot be used to purchase real estate, but they can be used for working capital, furniture, equipment or supplies. The nonprofit lenders provide business training and technical assistance to their micro-borrowers. More information is available at www.sba.gov/microloans

• If you need a surety bond to compete for a contract or subcontract, the SBA’s Surety Bond Guarantee Program can guarantee bonds up to $6.5 million. The SBA will reimburse sureties between 70 and 90 percent of losses if a contract defaults. “Bonding companies are insurance companies, and they tend to see a risk in a new business,” said John F. Fleming, Director of the SBA’s Delaware district office. “So what the guaranteed bonding program does is it guarantees part of that bond back to the insurance company.”

• Delaware has two privately-owned small business investment companies that use their own funds and funds borrowed with SBA guarantees to make equity and debt investments in small businesses. Licensed investment companies are for-profit firms whose incentive is to share in a company’s success. Delaware companies include Inflection Point Ventures in Newark at (302) 452-1120 and Innovation Ventures in Wilmington at (302) 777-1616.

• The SBA offers 17 ways lenders can request guarantees to work with small businesses – from micro-loans to $500,000 lines of credit.

Expanding internationally

• If your small business is ready to go global, the U.S. Export Assistance Center in King of Prussia is a one-stop shop that does what the name implies. Experts from the SBA, the U.S. Department of Commerce, and the U.S. EXPORT-IMPORT BANK staff each center. Call Bob Elsas at (610) 382-3069 or email him at robert.elsas@sba.gov.

• The SBA’s International Trade Loan is designed to help small businesses enter or expand or compete in international markets. The SBA offers a maximum guaranty of 90 percent on a maximum loan of $5 million. The proceeds must be used for facilities and equipment in the U.S. used to produce goods or services for international trade, but the loan can be used for fixed assets, debt refinancing or working capital financing.

• The SBA’s Export Working Capital Program guarantees loans for short-term export working capital needs.  With this approval in place, exporters have greater flexibility in negotiating export payment terms because they have assurance that adequate financing will be in place when they get the order.

Money for R&D

• Through a competitive awards-based program, the Small Business Innovation Research program encourages for-profit small businesses to engage in federal research and development that has commercial potential.  Each year, federal agencies with R&D budgets exceeding $100 million must reserve 2.9 percent of their money for awards to small businesses. Eleven agencies currently participate in the program. For more information, call Gary Simon, business analyst at the Small Business Technology and Development Center in the Delaware Technology Park in Newark at (302) 831-0772.

• The Small Business Technology Transfer Program bridges the gap between basic sciences a commercializing innovation. Each year, federal agencies with R&D budgets that exceed $1 billion must reserve 40 percent for small business technology transfer grants to small businesses. More information is available at www.sba.gov.

Applying for contracts

John F. Fleming, Director of the SBA’s Delaware District Office, said he and the SBA counselors are thinking of starting a think tank for entrepreneurs seeking government contracts, similar to Delaware’s existing group for female entrepreneurs, which is so popular it’s being considered for a nationwide rollout. Until then, there are several ways to explore snagging a government contract:

• The U.S. government is the largest purchaser of goods and services in the world. Because your company can become one of the many suppliers that sell the government more than $500 billion in goods annually, it pays to learn about small-business set-asides – provisions that require a certain percentage of government business go to a small business. Procurement Technical Assistance Centers can help. They are designed to provide technical assistance to businesses that want to sell to state, federal and local governments. A representative will sit with you one-on-one and determine if your company is ready to sell to the government and help you decide how to position yourself in the market. You may be eligible for special certifications that will help you get contracts. There’s a nominal cost for some services, but most are free. The Newark PTAC center is on UD’s STAR Campus. Phone: (302) 831-0781. The Dover PTAC is in the Bank of America Building at 1200 N. DuPont Highway. Phone: (302) 831-0781. In Sussex County, assistance is available at 103 W. Pine St. in Georgetown. Phone: (302) 831-0781.

• The federal government set a goal to award at least 5 percent of its prime contracts to businesses whose owners are socially or economically disadvantaged, and it also requires its prime contracts to set a goal of awarding 5 percent of their subcontracts to disadvantaged business owners.

“Disadvantaged” isn’t necessarily what it seems. If your net worth is less than $250,000, excluding your home, you might qualify. Ditto if you are a woman in the construction field. To become eligible, apply for an 8A certification at www.sba.gov/sdb


To link with a local lender quickly, try the SBA’s LINC program at https://www.sba.gov/tools/linc

If you’re classified as “disadvantaged,” you can be awarded no-competition contracts through the SBA’s 8A program at https://www.sba.gov/category/navigation-structure/8a-business-development-program

For more information on other SBA programs, access the SBA’s Delaware resource guide at https://www.sba.gov/sites/default/files/files/resourceguide_3107.pdf

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