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As Fedex just received a huge slap from the IRS about how they treat their independent contractor delivery staff, employers are once again debating the best way to classify their own employees. Starting with the 2009 Recession, tough times have forced many business owners to shift their labor force more toward contractors. The 12,000 plus package deliverers in FedEx’s Ground Division further demonstrate how grey the area is in defining the duties and roles that a contractor can fulfill.
What determines a contractor?
The IRS’ legal definition of a contractor largely depends on how much control the employer has over the employee while he/she performs assigned tasks. If the employer tells the employee what will be done, when it will be done and, how it will be done, odds are the individual is classified as an employee – even if the employee is “given the freedom of action.” The debate for FedEx began five years ago in 2009 when several states threatened suits against FedEx if they didn’t reclassify their Ground Division drivers as employees. Quickly thereafter, the IRS reversed its $319 million tax assessment against FedEx allowing them to continue the classification of drivers as contractors.
On August 27, 2014, the Ninth Circuit court of Appeals ruled that 2,300 FedEx Ground Drivers of the original 12,000 drivers concerned were in fact misclassified and should now be considered employees under California’s workplace protection statute. The significance of this verdict is vast and expensive. FedEx may owe its new workforce of employee drivers hundreds of millions of dollars in back benefits such as healthcare, workers compensation, paid sick leave, vacation, retirement and other employee benefits. Additionally, previously classified contractors were responsible for the trucks, uniforms, FedEx scanners, fuel, insurance and maintenance on their vehicles – all items that an employee would normally receive from an employer.
Conversely, an individual can be considered an employee if they perform services for the business and the business dictates what will be done and how it will be done. There are three categories surrounding Common Law Rules for determining the control and independence of a worker:
Behavioral – Does the company control or have the right to control what the worker does and how the worker performs the job?
Financial – Are the business aspects of the worker’s job controlled by the payer – such as reimbursement of expenses, provision of tools or supplies and how the worker is paid.
Relationship type – Is there a written contract or employee benefits available to the employee?
If you’re seeing grey areas, that’s because there are many! Companies have been claiming independent contractor status for employees for decades. Whether it is because they want to remove some of the financial burden of overtime, benefits and other compensation from the equation or just out of lack of understanding the rules and grey areas, classifying is challenging. Yet, legal disputes like the FedEx suit are changing the face of employment law and what the employer-employee relationship truly means for both the employer and the worker. The IRS is continuing to define differences between employee and contractor and plans to release clarification soon. Until then, if you are unsure how to interpret the rules for your business, talk with us today.
More than 20 million Americans have been out of work or under employed each month since the 2009 recession began, says a November 2012 report on CBS’s news program, 60 Minutes. Employers are eagerly searching for trained workers to fill technical entry level and mid-level positions. What employers have discovered is known as, the “Skills Gap” – a serious deficit in the job market between the types of jobs available and the potential recruitment pool of qualified skilled workers.
Carl Hudder is the CEO of Click Bond in Carson City, NV a manufacturer producing fasteners for cables, panels and anything that connects parts in planes, ships and trains. Click Bond has contracts with national and internationally based companies including the U.S. Department of Defense. Hudder’s company needs workers that can program the machines, validate product specifications and test the products it makes. “Basic skill sets such as reading, writing, problem-solving, and even showing up on time seem to be lacking in the job market today,” says Ryan Costella, head of strategic initiatives at Click Bond. “We’re in the business of perfection and we can’t hire people who don’t even have basic skill sets,” says Costella in the 60 Minute interview.
Lack of skilled workers is one reason for the rising number of unfilled jobs. “We can’t find enough students who are willing to pursue these trades,” says Hudder. So rather than sit and wait for qualified workers to come to them, Hudder and Costella decided to partner with a local community technical school and the State of Nevada to groom their own employees. They go to the school, interview students for attitude, aptitude and then invite them into a 16-week training program for the jobs they needed filled. “The program focuses on the machines in today’s manufacturing environments. Students learn to operate the technology and even do trigonometry as part of their new roles. The 16-week program is free, paid for by Nevada taxpayers and the participants can even continue to collect unemployment while they attend.
For companies like Alcoa, one of the oldest manufacturers in the country, the problem isn’t finding the right employees, but retraining employees for new technologies and skills needed to take the company into a more innovative mindset. “The environment is changing all the time,” warns Klaus Kleinfeld, CEO of Alcoa. “If you don’t keep up, someone else will eat your lunch.” And he’s not wrong.
According to surveys by the Wall Street Journal and Vistage International, a San Diego peer advisory group for executives, “about 22% of 848 small-business owners and chief executives said they had unfilled job openings in June because they couldn’t identify qualified applicants, up from 31% of 811 business owners nearly two years ago.”
Lack of qualified applicants has caused a rift in small business growth, too. Not enough available talented workers means that small businesses cannot accept as much new business as they like because they cannot handle the increased work load. Conversely, economists and workforce experts say that many businesses aren’t doing what they should to adequately train and educate their own employees. That reluctance has made it hard to sustain both business growth and careers. The stagnancy in the labor market has resulted in a lack of depth on the corporate bench for knowledge and skill sets. If employers are only seeking workers with a very specific skill set, the available pool is considerably narrowed. According research group Bersin by Deloitte, “the government hasn’t tracked spending on corporate training since the mid-1990’s but one rough measure, the percentage of staffers at U.S. manufacturers dedicated to training and development, has fallen by about half from 2006 to 2013.
What are the options for finding the right employees when budgets and time are tight and pressure to be successful is all-encompassing? “Remember that while small business needs to be flexible and very responsive, to grow and see profitability requires planning and strategy,” says Van Ballantyne, owner of Counting House Associates in Greenland, NH. “Employees are a business’ greatest investment and asset. Thinking creatively about how your employees can develop within your organization may ultimately be a win-win for both the business and the worker.”
There’s so much more to hiring and retaining workers than just offering the right salary and health plan. To learn more about how your small business can grow by bringing in the right talent and retaining them, talk with a us today.
Small businesses struggle with countless tasks but hiring the right employees and finding ways to compensate them is by far one of the biggest stressors. According to Joseph Kilmartin, Director of Compensation at Salary.com, employers need to look past compensation alone and focus on the total rewards the position offers, which includes salary plus bonuses, benefits, paid time off and other non-monetary incentives.
Retaining quality employees is a difficult task. Benefits, salary, perks and other incentives can be a veritable minefield for employers to navigate to strike the right balance between paying employees fairly for their talent and skill sets and keeping those employees from their competitors.
Total compensation for an employee includes more than just salary, but also benefits, retirement contributions, paid time off, stock options, bonuses, and other perks. While salary is important, there are many other ways to compensate employees for their contributions without topping out your budgets. In an NPR report on men in the workforce, Generation-Y (those born between 1980 and 2000) men interviewed were found to be more attracted to a flexible work schedule and improved family time over higher salary and longer work days. With 300,000 Baby Boomers (those individuals born between 1946 and 1964) retiring each month, employers need to start rethinking their workforce and planning for the demographic shift to a younger workforce with a different set of social expectations and morays. Recently, these changes could be seen in a very public forum when New York Met’s Daniel Murphy missed the first two games of the 2014 season as paternity leave to be with his new born son and wife.
Even as times continue to change, other modes of business operations remain on a steady course. Keeping employees happy, increasing profitability and managing the day to day business can add up to a full day for business owners. Knowing how to classify your employees is a critical determination that leads directly to how they should be compensated. There are two types of employees in a business; exempt and non-exempt. Exempt employees are paid a salary that is fixed and not based upon the number of hours worked each week. They often receive a higher level of compensation and benefits, but non-exempt workers can make more money by working more hours and receiving overtime pay for any hours worked over 40 in a work week. Bear in mind, that each job, regardless of who is performing the job, must provide the same pay range and cannot offer a higher maximum pay to one employee over someone else doing the same job.
Steps you can take to retain and pay your employees fairly:
Staying competitive in a tough job market means planning time to review your pay rates and benefits packages at least once every other year. You don’t need to review all your positions at once, break the positions into groups and tackle a manageable amount each time. To learn more about how your compensation package ties into other aspects of your business and your profitability, talk with us today.
Business leaders are constantly encouraging executives and entrepreneurs to share their experience and business acumen with greener students and young professionals, but what happens when the teacher needs to learn a few new tricks herself? There’s an increasing trend to bring on interns and young mentors to help the Gen X and Boomer generations learn the ins and outs of social media and technology that has thus far eluded them.
Breaking Down the Generations
Before you run out and grab whatever graduating college senior you can find to show you how to Tweet and use social media, consider your own business’ needs and ability to integrate the youth mentor into your company. If your business situation isn’t conducive, consider an alternative. Schedule an initial consultation meeting to learn about each other and then, if all goes smoothly, schedule additional time to move your project forward.
Don’t be afraid to admit what you don’t know. Having a younger employee providing you with advice may seem uncomfortable at first, but remember why this relationship is mutually beneficial. You can provide insight and life experiences to your Gen Y mentor, where as your younger counterpart can guide you in the ways of social media, youthful perspectives and market habits, and if stepping into foreign markets, even cultural nuances and protocols., Reverse Mentoring, a term coined by former General Electric (GE) Chairman Jack Welch, can also provide great insight into recruiting and how to reach out to their Millennial counterparts. “The millennial generation wants to have their voice heard early in their careers,” says Wendy Murphy, an associate professor at Babson College in Massachusetts. Reverse mentorship opportunities offer the young workers a chance to learn on the job while still providing valuable contributions to the organization. Reverse mentorship doesn’t need to end with recent college graduates either. Consider polling a segment from each generation within your company to gather a full range of market opinions, preferences and points-of-view.
There’s more than one way to crack an egg. If the idea of having a young mentor at work every day isn’t palatable, try a different approach. Consider using a college or post-graduate student to consult with you. These meetings can be done by phone, or even on video chats like Facetime. Once you’ve established a rapport, then it may be a good idea to bring your mentor into the company for a tour or even to work for a short period. Working up to a longer term relationship can be a great way to test the waters; not just for you but also for the mentor to see if they feel comfortable as well. If you’re short on time, try ‘speed mentoring’, which as it sounds, is like speed dating but with prospective mentors in “short bursts of advice and a cache of business cards,” says a report on Bloomberg Businessweek. Made popular by Colleges and Universities across the country, these speed mentoring events can be a great way to meet experienced young professionals and see who you really connect with.
Set clear goals. By establishing ground rules and open lines of communication expectations are realistic, and achievable rather than frustrating and overwhelming. Be sure to ask your mentor what s/he expects to get out of the relationship. Just because you sought out a youth mentor, doesn’t mean that the mentor is only in it for your benefit. Remember, the best relationships are mutually beneficial.
Know that with youth comes energy and enthusiasm. What can be wrong with that? For Gen X’ers and Baby Boomers, this energy can be interpreted as impatience, ego, and short-sightedness. For the Millennials, entering an established corporation with many layers of management can feel stifling and bureaucratic. Understand that there are very specific cultural and social differences between these age groups and plan to talk about them openly with your staff.
Lastly, review your business’ policy on social media and be ready to provide parameters for using social media during the work day. If you allow your Millenial mentor to Facebook and Tweet, you’ll need to make sure you’re setting fair expectations for the rest of the company as well.
The last decade hasn’t been kind to the Millennials. Those 18-29 year-olds that struggled to get an after school job are now some of the most highly educated and underemployed or unemployed Americans this country has ever seen. Staying in college beyond the four-year bachelor’s degree to obtain master’s and even doctoral level educations, these college graduates aren’t hitting the pavement looking for work – no, they’re far more industrious – they’re starting their own companies. Companies like Facebook and Snapchat started in college dormitories and grew into multi-billion dollar enterprises in the time it took most of us to venture into the world, settle down and buy our first house. Unemployment numbers trailing in the mid-7 percent realm and staggering student loan debts of an average $26,000 per student, have driven these young Americans to think about employment and earning a living differently.
College entrepreneurial education is on the rise to meet this need. According to The Ewing Marion Kauffman Foundation there are some 5,000 entrepreneurship courses offered last year at graduate institutions across the country. “35 percent of employed Millennials have started their own business on the side, and 72 percent want to quit their jobs to become entirely independent,” says a study conducted by freelance job marketplace oDesk and Millennial Branding. Additionally, Millennials are starting businesses while they are still in school. A report by Business Insider found that “36 percent of recent college graduated started businesses while getting their degrees and 21 percent started a business right after school because they couldn’t find a job.”
If you’re feeling the entrepreneurial bug, how can you start a business, too?
Like 12 million of your fellow Americans, you have filed form 4868 and requested a six-month extension and may be wondering what’s next. Below are some steps for completing your taxes and ways to avoid expensive penalties.
Filing the extension on time (postmarked by 11:59 p.m. on 4/15 in your time zone) may have eliminated the hefty 5 percent of any unpaid penalty per month up to 25% of the total, but what the extension did not eliminate is your responsibility to pay taxes. If you mailed your extension on time, the IRS will not respond with any type of acknowledgement. If you mailed the extension without your tax payment, you WILL be hearing from the IRS. Just know that the IRS expects payment regardless of tax documentation or preparation. Even if you file for an extension, you still need to make an estimated tax payment as soon as possible in order to avoid costly penalties and interest. “The goal is to pay ninety percent of what you owe before your taxes are submitted,” says Peter McMahon, owner of Peter McMahon, PC in Plymouth, MA. “If you overpay, you will be refunded the overage, but if you underpay, you’ll face a penalty.”
What if I can’t pay the taxes owed?
Just because you think you might not be able to pay your taxes, is no reason to not file. “Many times, clients will come to us, with several years of back taxes haunting them,” says Steven Feinberg, CPA of Appletree Business Servicesd in Londonderry, NH. “We see the fear and anxiety of the unpaid tax burden as they come through our doors, but after we’ve had a chance to review their tax situation and work out a plan of repayment, we also see the weight lifted. They often feel lighter and much less worried when they leave our office.”
If you can’t afford to pay the taxes you owe, the IRS offers payment plans including a short term extension to pay and long-term installment plans. “Whatever you do, don’t ignore your overdue taxes entirely,” warns McMahon. “Failure to pay can result in the IRS taking far more aggressive steps such as garnishment of wages, court appearances or even prison.” Bear in mind, that if the IRS owes you money, they won’t pay until your taxes are completed. Additionally, until all returns are filed, the three-year statute of limitations period for the commencement of an IRS audit never begins. That means that your 2013 delayed taxes can be the impetus of a 2010 audit and if the IRS finds that you actually owed for 2010, you will need to pay interest and penalties
The fine print:
The IRS advises paying what you can to reduce interest and fees, but is flexible in repayment options. Taxpayers can set up a monthly repayment option by completing Form 9465 (Installment Agreement Request) and submit it with your return. The beauty of using this form is that you can determine your own monthly repayment amount and terms. For example if you owe $4,000. You can offer to pay $225 on the first of each month. Approval is automatic for amounts owed of less than $10,000 and repayment periods of 36 months or less. For debts less than $50,000 in combined taxes, fees, interest and penalties, the process can be completed online at IRS.gov. For debts greater than $50,000, additional forms and repayment documentation must be completed and sent to the IRS. Once approved, the IRS will charge a $120 set up fee or $52 if you agree to monthly EFT from your checking account. You will continue to be charged interest at a reduced rate of .5% monthly (totaling 6% annually) which is still less than most credit cards or commercial lenders.
No matter how you decide to work with the IRS, be sure to file the appropriate forms and paperwork to demonstrate that you are making a good faith effort to pay your taxes. If you aren’t sure where your business stands, then it may be time to seek the advice of a small business accounting and tax professional.
The pace of today’s business is real-time. There’s little delay for production, shipping or even payments. On-demand environments have pushed start-ups and small businesses into a new growth curve. Business innovators like Geoffrey Moore have written best-sellers describing the perfect formula for over-night success. What businesses need, say Moore is four main pillars of growth and success; traffic, engagement, monetizing, and brand evangelists. In his book, Crossing the Chasm, Marketing and Selling Disruptive Products to Mainstream Customers (3rd edition, Harper Business, January 2014), Moore discusses the product life-cycle in the high-tech sector. The Technology Adoption Life Cycle begins with innovators, early adopters, early and late majority and finallylaggards. The greatest disparity happens between early adopters and the early majority, but gaps exist between each group. Businesses can become more competitive and find the greatest opportunities for growth if they can narrow the ‘chasm’ between the two groups, writes Moore.
Moore defines the chasm as the “rapid acceleration in market development followed by a dramatic lull, occurring whenever a discontinuous innovation is introduced – [one that] drives all high-tech enterprises to a point of crisis where they must leave the relative safety of their established early market and go out in search of a new home in the mainstream.” Moore defines each of the markets in the technology lifecycle as:
How the business owner can narrow this chasm is outlined in the steps below.
Step 1 – Target and capture a very specific market where you can quickly dominate from day one.
It is in the first step that deep customer relationship building happens. Business leaders need to pay special attention to each market’s need if product expansion is to occur within the next level of consumers, in this case, from innovators to the early adopters. Unlike the early majority, early adopters are willing to sacrifice convenience and practical use just to lay claim to being first. Early adopters knows that patience will reward them with improvements, product support, training and additional not previously considered uses for the product or service. The key to Moore’s strategy is to use each pillar as a launching pad to reach the next. Therefore, testimonials, word of mouth and positive marketing reaction can be the stuff magic marketing campaigns are made of.
Step 2 – Drive out whatever competitors there are in your business’ market.
While this may seem logical, it is far easier in concept than reality. If business owners take careful stock in the market they have captured and why, there are clues as to how you can capture the competition’s customers. By starting with a stellar product or service that is unique and high quality, it is entirely possible to dominate the marketplace. Moore uses Apple as his example and talks about how they entered the market with early adopters and quickly assumed a position inside a new market of business users. This new consumer base allowed Apple to quickly expand, while continuing to build on its strengths of innovation, compact design, and attainable price point. At the time of initial launch, Apple had no other competitor in the market that could even come close to competing with their product line. But if step two was all that was needed, then step three wouldn’t be just around the corner.
Step 3 – Use your newly strengthened foundation as a basis for even greater operations, while still working to close the ‘chasm’ between the next level in Moore’s hierarchy. For early adopters and the early majority, that means finding a more practical application that will help the early majority envision themselves using the product in everyday use. While cool products exist, can the early majority user find a practical reason why he should spend his hard earned dollars to own it? For the makers of the high-action digital video camera, GoPro, their best enthusiasts were also their best advertising and testimonials making future users ‘see’ for themselves how they might put the attachable and wearable camera to their own use. The company’s sales have more than doubled every year since the camera’s debut in 2004. According to founder and CEO, Nick Woodman, the company has sold 2.3 million cameras and grossed $521 million. As GoPro continues to grow and diversify, it will be reaching for new experiences as a media organization. Far-fetched? Not really considering that energy drink manufacturer, Red Bull is considering the same venture. Capitalizing on its energetic, youthful, athlete promoters, Red Bull and GoPro are using their leverage in social media channels like YouTube to further promote the brand and cross the ‘chasm’ from innovators to early adopters. The key is to take what the business does well, for GoPro, that’s mountable high-definition digital videos, and then expanding that expertise by using creative ways to spread that vitality into new markets and previously not considered uses.
Moore’s book provides a new perspective in how small business owners can ‘think big’ and take greater control of marketing strategies for greater sales. With a little luck and a good deal of strategy, your business may be poised for overnight success.
Small businesses are particularly vulnerable to the effects of a catastrophic event such as a fire, flood, tornado, most recently landslides, or other natural disaster. While business casualty and other types of insurance coverage are available, there will still be other losses that are not recoverable and leave your business facing a deficit.
“Casualty covers a range of sudden, expected or unusual loss due to damage of property,” says Dave Flynn owner of Flynn Accounting Services in Woburn, MA. Some typical events can include natural disasters like hurricanes, as well as acts of vandalism, theft, car accidents and embezzlement. Events that are not deductible include deterioration due to age, weather, termites and drought. “Like any part of the tax code, there are a few exceptions including when a drought may be considered a casualty if the property damaged was used for a trade or business, or in a transaction for profit such as an investment in farmland,” continues Flynn.
Business inventory losses can be treated a few different ways. According to IRS Publication 584-B – Business Casualty, Disaster, and Theft Loss Workbook, the loss can be considered as a casualty loss described above. Conversely, the loss can be treated as part of the business’ goods sold. The loss against goods sold may help to reduce the business’ net income thereby reducing the amount of Self-Employment Contributions Act (SECA) taxes paid.
Adjusted basis versus fair market value (FMV)
The IRS considers two important aspects of the property’s value. Adjusted basis typically includes the original cost paid for the property and any improvements minus depreciation (including any Section 179 deduction). If the property wasn’t originally purchased by the owner but rather was inherited, additional tax treatments may apply.
Fair market value equals the price a property could be sold for to a willing buyer when there is no need to sell and all parties know the relevant facts about the property. Determining FMV can be a little tricky, so it’s always advisable to seek expert advice whenever possible. The IRS uses a pretty strict measurement and only allows the lesser of either:
If the property has increased in value since the original purchase, you will still only be able to deduct the property’s cost from the original purchase and not the increased value. Conversely, if the property has decreased in value, you can take the loss that is the lower current value. The amount claimed must be more than $500 and meet the 10% adjusted gross income limitation. Remember that any amounts reimbursed by insurance coverage are not deductible and any amounts that are received as reimbursement must be declared as income. Casualty and theft losses can be carried back three years and forward for up to 20 years, depending on the size of the loss.
If the property was a total loss, then the value of the loss will depend on whether it was a business or personal property. If it was a business property, the calculation used must take the adjusted tax basis after the loss, minus any salvage value received. You’ll notice that FMV doesn’t come into the equation at all. Additionally, if more than one item was damaged by the casualty, each item must be calculated separately in order to take the deduction.
Once the calculations are done, be prepared to prove that your losses are: a) real (i.e. that you suffered a legitimate and provable loss), b) you had actual possession of the property, and c) any lack or insufficiency of reimbursement (typically by the insurance company) to cover the loss. That means that you’ll want to keep receipts and considering that casualty usually involves some type of catastrophic event like a hurricane, keeping a digital off-site copy of receipts ‘in the cloud’ is a great way to ensure that you’ll still have a safe, legal paper trail well after the event. Acceptable proof of theft can include witness reports from those who saw your property taken, police reports, and even newspaper accounts of the event.
What happens if the final settlement from insurance claims hasn’t been received before taxes are due? “Taxpayers are responsible to make an estimated guess on what the reimbursable tax amount owed,” says Flynn. “Typically casualty losses must be claimed in the year in which they occur; however, if the loss occurred in a presidentially declared disaster area, you may be able to deduct the loss in a previous year.”
Industry reports say banks have money to lend and are ready and willing to lend to the right businesses. Being one of those small businesses often feels like playing and not winning the lottery. Each time you complete the loan application and sit in the lobby waiting for your opportunity to pitch your business, you’re filled with such great hope for your future. The entire successful business vision plays out in your head as the clock ticks ever closer to your appointment time. Sixty seconds into the bank manager’s meeting and your stomach drops. The realization that today won’t be your day returns. Five minutes later you’re shaking hands across the desk with the promise of future opportunities when your business has more ‘stability’. The Small Business Catch-22 has struck again: How to gain the right type of funding while still maintaining your business’ worth and keeping risks minimized.
It’s these moments, the times when a business owner feels most desperate that bad financial decisions are often made. Questions arise about what could have been done differently, the type of business plan that would truly make the business stand out in a sea of prospects, and alternative quick cash offers are all considered. A few are tried and costly, if not devastating to the business.
Here’s what to avoid:
What you should consider:
The Small Business Investment Company (SBIC) is part of the Small Business Administration’s array of services to help businesses connect with resources for capital investment. Formed in 1958 to “bridge the gap between entrepreneurs’ need for capital and traditional sources of funding, the SBIC makes debt and equity investments in some of America’s most promising small businesses. While the SBA doesn’t grant the loans themselves, the agency does provide funding to “qualified management firms with expertise in certain sectors or industries. For every $1 an SBIC raises from a private investor, the SBA will provide $2 of debt capital, subject to a cap of $150 million.[i]”
As part of the program’s achievements, the SBIC had
Like any government interaction, there are rules governing how the SBICs can lend and to whom. SBICs can invest in businesses using loans, debt securities with equity features and equity. The businesses must be located in the U.S. or its territories and the business must have more than 51% of its employees located inside the U.S. SBICs cannot invest an amount greater than 30% of the SBIC’s private capital in any single company.
To qualify, small businesses must have a tangible net worth less than $18 million and average after-tax income for the prior two years of less than $6 million. SBICs must also make 25% of their financings in “smaller businesses” which are defined as businesses with a tangible net worth of less than $6 million AND average after-tax income for the prior two years of less than $2 million. There is also a term of control of no longer than seven years after which, the SBIC must request approval from the SBA to continue controlling authority over the small business.
If using an SBIC isn’t the right fit for your small business, consider a more traditional SBA loan or grant program. Information on these types of loans can be found athttp://www.sba.gov/category/navigation-structure/loans-grants.
For even smaller start-up funding, research crowdsourcing opportunities through organizations like kickstater.com. Perfect for project-based business ideas like bringing a new product to market, funding a documentary, or underwriting the production of a music CD, crowdsourcing involves pitching your idea to individuals who will be so moved by your idea that thy will contribute to your efforts. In return for their investment, backers often receive a copy of the published work, invitation to the film’s premier or other perks. Unlike the above investors, crowdfunding investors are often not in it for the financial gain, but the more altrustic purpose of funding creative projects that would otherwise go unfunded and not exist. To learn more visit theKickstarter School.