While most companies seeking venture capital initially think of investors and venture capitalists, a large alternative source of financing for federal grants and loans. The two largest grant programs of the federal government are managed by the Small Business Administration (SBA) and "Small Business Investment Companies (SBICs).
An SBA loan, whether a direct loan from the SBA, or, as it is more common, a bank loan guaranteed by the SBA, is essentially a bank loan. The advantage of it by a traditional bank loan is the rate. SBA rates are typically much less than traditional lending rate.
In most cases, a loan guarantee bank SBA, the SBA guarantees 90 percent of the loan will be repaid to the bank. As such, banks are much less at risk than in most other loans, and are a little more flexible in regards to whom they offer these loans. However, the SBA usually requires the founders of the company to personally guarantee the loans, making them at risk if the company collapse.
Otherwise, "Small Business Investment Companies (SBICs) are held in private companies that are authorized and regulated by the SBA. The small or new businesses that may receive assistance from the SBIC program can receive equity and / or loans long term these companies. Essentially, these companies provide their own capital, which is supplemented by federal funds, the companies they finance.
Interestingly, the taxpayers of the USA enjoys the SBIC program as tax revenues from successful SBIC investments have more than covered the cost of the program. Similarly, the program has created hundreds of thousands of jobs.
In summary, SBA and SBIC financing are viable alternatives to fund investors and venture capitalists and should be considered in the capital rehabilitation. Similarly angel financing and venture capital, companies seeking SBA and SBIC financing need a strong management team and value proposition, and a high level of professionalism and convincing business plan to raise capital they need.