Small Business Financing
There are a number of valuable financing options for small businesses, but the process can be complicated without the proper guidance. The EDC and its network of local financial partners are available to serve as a knowledgeable and well-connected resource to help determine the best financing options available.
Securing working capital for facilities, expansion, equipment upgrades and the global distribution of goods is what our network is all about. Whether it is a small expansion or an entire community preparing for the addition of a major development, taking advantage of the EDC’s financial portal is a smart first step.
Legislation passed by the Florida Legislature in 2007, which created sections 288.9621 -288.9625 of the Florida Statues, collectively referred to as the Florida Capital Formation Act, provided for the formation of the Florida Opportunity Fund (“FOF” or the “Fund”). The FOF is a fund of funds that directs investments into venture capital fund managers, who in turn invest in seed and early stage concepts in Florida. The $29.5 million program is sponsored by Enterprise Florida and is managed by Florida First Partners (FFP).
The FOF was created to realize significant long-term capital appreciation by investing in high-quality venture capital funds that will focus (in whole or in part) on making investments in Florida.
- Increasing the availability of seed capital and early stage venture equity capital for emerging companies in the state, including, without limitation, enterprises in life sciences, information technology, advanced manufacturing processes, aviation and aerospace, and homeland security and defense, as well as other strategic technologies.
- Significantly increasing the potential to create new businesses and jobs in the state that are based on high-growth potential technologies, products, or services that will further diversify Florida’s economy.
The Florida Growth Fund is a $250 million capital venture initiative started to invest in technology and growth-related businesses in the state. The Florida Growth Fund is managed by Hamilton Lane. The Fund will seek to make meaningful commitment to top tier partnerships. They are looking for the following:
- venture capital, growth equity and small to mid-size buyouts
- technology, aerospace, renewable energy, medical and life sciences
- businesses domiciled in Florida
- businesses that have demonstrable, material Florida Operation presence
- Differentiated return streams and attractive performance track record
Florida Institute for Commercialization
The Institute enables interested parties to evaluate potential opportunities and facilitates the process by which these discoveries enter the commercial marketplace. The Institute showcases technologies and products developed by publicly supported organizations across the state, and commercially viable discoveries are paired with seasoned entrepreneurs and investors to ensure their growth and success.
Establishment of the Institute is a result of legislation passed in 2007 to stimulate growth of science and technology-based companies in industries that are driving the global economy. Related initiatives include the availability of gap funding targeted toward universities to help take new ideas through the “proof of concept” stage, and the creation of the Florida Opportunity Fund for increased investment in existing, early-stage ventures. The Institute links the two, taking proven technologies from the universities and identifying funding and other resources required for commercial success.
Florida Small Business Credit Initiative
Created as part of the Small Business Jobs Act of 2010, SSBCI was designed by the federal government to help states strengthen existing loan and equity programs and/or create new programs that support financing small businesses. Florida received a total SSBCI allocation of $97,662,349.
The primary objective of Florida’s SSBCI Program is to leverage private capital for Florida’s small businesses, which are defined as businesses with an average 500 employees or fewer. After five years, Florida must show that, taken together, $10 in new small business lending or investment was generated by every $1 in SSBCI funding (known hereafter as the “10:1 private capital leverage ratio”). Therefore, Florida’s SSBCI Program must generate at least $976,623,490 in new private capital for Florida’s small businesses. Accordingly, to achieve the required 10:1 private capital leverage ratio, Florida’s SSBCI Program will place emphasis on supporting loan and equity transactions that provide strong private capital leveraging opportunities.
Advantages to Florida’s small businesses include:
- Access to debt and venture capital financing that may not otherwise be available
- A flexible and non-bureaucratic resource for funding
Advantages to Florida’s lenders and sources of private capital include:
- Ability to approve a loan that would otherwise be declined
- Provides a non-competitor participant on credit facilities and investments
Florida First Capital Finance Corporation
FFCFC carries out its work through the administration of various government and private small business capital access programs. Most significant of these is the U.S. Small Business Administration (SBA) 504 Loan Program.
The SBA 504 loan program in Florida specifically exists to help small to mid-sized business owners acquire commercial property without the financial hassles and high cash outlay requirements often associated with conventional loans.
The SBA 504 program does not provide financing for working capital, inventory and such; however, its sister program, the 7(a) loan program, does and can be packaged with a SBA 504 loan. More information on the 7(a) program can be found at www.sba.gov.
Access Florida Finance Corporation (AFFC) — Created to increase the number of qualified black business enterprises, which in turn will increase competition in the marketplace.
Florida Development Finance Corporation (FDFC) — Created as an issuer of bonds, both taxable and tax-exempt, to provide low-cost capital to Florida manufacturers. When more than a traditional loan is needed, this is a great resource.
Florida Export Finance Corporation (FEFC) — Created to expand employment and income opportunities by supporting the export of goods and services from the state. It complements the EDC’s International Business Development program, helping companies that are exporting products overseas.
Florida First Capital Finance Corporation (FFCFC) — Its 504 loan program is vital for businesses investing capital in facilities and equipment. The program requires the company to participate by contributing a percentage of the amount needed, which often provides local financial institutions an opportunity to provide needed supplemental funding — a vital piece of the puzzle.
Neighborhood Lending Partners, Inc. (NLP) — Provides financing to developers of affordable housing and community revitalization.