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Financing for Startups

By Eugene E. Valdez AKA The Loan Doctor

Most of the privately owned businesses in the U.S. are defined as “microenterprises.” The definition of a microenterprise is generally a company generating annual sales in the $100M to $1,500M range with small loan needs of $10M to $50M.

It is hard for microenterprises to secure bank loans as banks do not earn much profit on these size loans as the fixed and administrative costs are high. This is the case for established companies with an operating history.

Now if you are a microenterprise that is a pure startup (pre-revenue), have a less than stellar  personal credit and you have no business  or personal assets to offer as collateral,  your chances of securing a loan is virtually impossible in today’s  business loan market.  Now some of you might say, hey Gene what about the “online lenders” and “crowd funding?” Most online lenders will not do startups but they will do young operating companies if your thrilled with the opportunity to pay interest in the 20%- 50% range. Public Crowd funding or other private investor equity is also very hard to tap as again small loan opportunities do not equate to large returns on investments in the eyes of these investors.

But all is not lost, if you are a budding entrepreneur who is seeking a small startup loan to jumpstart your business, write the name and contact information of this organization down:

AmPac Tri-State CDC

22365 Barton Road

Grand Terrace, CA  92313


Ampac is a 501-C3 non-profit that has been approved by the SBA to make small loans to fund startups in the Inland Empire. Ampac is funded by the SBA and the key is that they have their own loan committee and are allowed to make their own loan decisions.  Their loan rates while slightly higher than bank rates are significantly lower than other options such as credit cards, online lenders, crowd funders or private investors.

Since their mission statement is to create jobs, strengthen the local community and give as many microenterprises as possible a fair chance to pursue their business goals,  they are more lenient in their loan underwriting as opposed to banks.  But let’s be clear they don’t give the money away and they do have criteria.

Here are the key ones:

Business Plan- Since this is a startup, identification of the target market and the value proposition is critical.

First Year Projections- Since these numbers represent how you are going to repay the loan, they must be well thought out.

Management Experience- While not a deal killer, it helps if you have direct or indirect experience in the industry you are considering.

Some Cash Equity- While not a deal killer having some “have skin in the game” by investing some of your own cash is very important.

Personal Credit- If your personal credit has some negative issues be prepared to write letters of explanation as to why they occurred and why they won’t be repeated.

Again collateral is not required, but if available it helps. Good luck!!


Eugene E. Valdez

Eugene Valdez is a 40-year veteran of business/financial management and owner of The Loan Doctor, a full service business loan consulting firm based in Upland. He can be reached at 909-230-0024 or [email protected].

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