Business Monday

The Florida Microfinance Act: How can it help my small business?

The Florida Microfinance Act (Florida Statutes Sections 288.993 to 288.9937) was enacted in 2014 to help provide access to certain financing options for small businesses and entrepreneurs. Small businesses and entrepreneurs have historically had significant problems raising capital, and the act was intended to address these problems.

Effective April 2, the state authorized designated loan administrators to begin accepting applications for participation in the program. The program has two components: a loan program where qualifying small businesses and entrepreneurs can get loans of up to $50,000, and a loan guarantee program (administered by Enterprise Florida) under which qualifying participants can obtain a loan guarantee in connection with loans from $50,000 to $250,000. The program is administered by the Florida Department of Economic Opportunity.

This program is available to small businesses or entrepreneurs in Florida that have no more than 25 employees and annual revenues of up to $1.5 million. Borrowers who seek loans must participate in business training and technical assistance provided by the Florida Small Business Development Network. Proceeds from a loan under the program must be used for startup costs, working capital and to purchase materials, supplies, furniture, fixtures and equipment. The repayment of loans must be personally guaranteed, and borrowers must provide information about job creation and other financial data to the loan administrator. A borrower can receive a maximum of $75,000 in loans each year and a maximum of two loans a year and five loans over a three-year period. The program is also designed to help small businesses and entrepreneurs get subsequent private financing.

How can this help your small business? It may provide relatively quick access to capital for qualifying small businesses and entrepreneurs. This can be very valuable because it provides a much-needed potential source of capital at a critical stage in development. Additionally, these companies and entrepreneurs often have difficulty raising initial capital. Personal resources and friend and family funds are usually limited, and most of these companies and entrepreneurs will not yet have realistic access to traditional bank financing or equity financing through venture capital, private equity or angel investors. This program may provide the initial jump start that a small company or entrepreneur needs to get the business going and to progress to the next step.

This program may be especially helpful in industries where technology has substantially reduced the amount of capital required for a business. In many industries the use of cloud-based technology, for example, has significantly reduced the costs of starting and operating the business. Even though the amounts available in the program are relatively small, they should be sufficient to allow many businesses to successfully navigate their early stage financial challenges and move to the next level.

Find information about the program and the requirements for participation at http://www.floridajobs.org/microfinanceprograms.

Bob White is a shareholder with Gunster law firm.

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