What does it take to gain funding if you are a small business owner? “There are a lot of myths out there,” says David Plucinsky. “If you have never searched for funding or a bank loan before, and particularly if you are new in business, what you don’t know may very well keep you from actually getting the funding you need.”
Plucinsky and Leon Petelle will lead a seminar on how to get funding for your small business Tuesday, November 20, at 6:45 p.m. at the Princeton Public Library. The seminar will provide insight into various ways to fund small businesses from internal and external sources. External funding sources to be discussed include borrowing from family, friends, banks or other lenders, and sources such as grants or equity. Cost: free, and reservations are not required. The event is jointly sponsored by the library and the Princeton chapter of SCORE.
The Greater Princeton Area Chapter of SCORE is part of a national nonprofit association and a resource partner of the SBA. The organization’s more than 11,000 volunteers serve as “Counselors to America’s Small Business” and are dedicated to the education of entrepreneurs and the formation, growth and success of the nation’s small businesses, one client at a time. SCORE provides free and confidential business counseling, coaching, and mentoring.
Both Petelle and Plucinsky have international business experience. Petelle is a CPA who retired after working 27 years for a large pharmaceutical company in both the U.S. and overseas in positions including treasury operations and cash flow management. He helped establish and build his company’s business in former Iron Curtain countries after the fall of the Berlin Wall.
Plucinsky has more than 30 years of experience working both in the United States and internationally. He grew up in Montclair and attended what was at that time Montclair State College (now Montclair State University.)
“Back then most of the smaller colleges in New Jersey such as Rider and Montclair were teachers’ colleges. I took just enough classes to know that I didn’t want to be a teacher,” he says. He was in the business school and had enjoyed accounting classes, but found the college did not offer enough courses for a true accounting major, so he took courses in the summer and at night at other schools until he had enough credits to graduate with a BS in accounting from Montclair in 1971.
“I was fascinated by banking,” he says, “although no one in my family had any banking experience. My father was a factory work and my mother was a secretary.” Plucinsky worked for several banks, eventually moving to the Wall Street branch of a California-based bank. While there he was given a two-year assignment in London, which stretched into 22 years working in England, the last 15 years as a self-employed consultant, advising start-up companies and turn-around situations.
“As a consultant I act in one of four capacities,” he explains. As an angel investor, consultant, advisor, and representative to angels or professional investors or a combination of these. Plucinsky has worked with companies not only in the United States and Europe, but also in Asia and Australia. Over the years he has helped both public and private companies to raise more than $50 million.
He is currently the director and chairman of the remuneration committee of Secure Electrans Limited, a private UK company operating in the secure internet/mobile payment space; chairman of the Lester Group, specializing in the provision of services to IT, medical and engineering professionals based in Europe and the Southern Hemisphere.
He is a volunteer counsellor, board member and Secretary/Treasurer of the Princeton Chapter of SCORE.
The Myths of Funding. “Most people believe a variety of myths about what is needed to obtain a small business loan from a bank,” Plucinsky says. “They think they are just going to go to the bank, say ‘give me some money,’ and that they will get it.”
Through SCORE he works to educate small business owners on the realities. One of the first things that people don’t realize, he says, if that if they are married their spouse will be required to co-sign the loan. “I always ask clients if their spouse is on board,” says Plucinsky. “If not, they will not get a bank loan.”
One of the reasons it is necessary for a spouse to co-sign is that the most common collateral used for a small business loan is a home.
Non-Traditional Funding Sources. Since the recession it has become much more difficult for a small business to obtain a loan from traditional sources. “Of course if you are a major corporation you can walk into a bank and easily get a loan. But major corporations aren’t going to banks for their money. They are raising it through other sources,” says Plucinsky.
On a smaller scale, of course, he suggests that small business owners do the same. These can include everything from family and friends to angel investors. But no matter who you ask for a loan, you need an excellent business plan. “People, even your friends, don’t give you money just because they like you. They give you money because they think you have a good plan that will bring them a return on their investment in you,” he adds.
Crowd Funding. The newest trend in small business funding is crowd funding, where a large number of individuals each invest a small amount of money. Once again, Plucinsky notes, using crowd funding is not as easy as it sounds. “You can’t just put up a website and say to people, ‘give me money.’ There are regulations.”
The first step in using crowd funding is to register with an intermediary that is properly certified by the government. There are a variety of reputable crowd funding intermediaries. Plucinsky suggests that the best way to start is with a computer search, then research the sites to make sure that they will offer you the assistance you need.
Crowd funding, and every other source of funding for a small business has one very important similarity, he notes. It is imperative to do your research and find out exactly what information the source wants and in what form it should be presented.