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Due Diligence Process: What Businesses Can Expect

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Before selling a business, you’ll first need to go through the due diligence process. The amount of research required may seem onerous, but it’s designed to protect both the seller and buyer.

Potential buyers would request access to your business financials, contracts, inventory, equipment, intellectual property and outstanding legal matters, which you would need to provide within a reasonable amount of time. The business acquisition would be contingent on the buyer’s investigation.

Continue reading to learn how to prepare for the scrutiny and inspection of the business due diligence process.

Rodger and Ann Lenhardt, owners of Norm’s Farms in Hartsburg, Mo., sold a majority stake of their family-owned elderberry operation in 2017. The business sells a range of elderberry products made from berries grown on the farm, which has been in the Lenhardt family for decades. Selling a large portion of the family business to another company, Missouri-based Innovative Natural Solutions, was emotionally challenging, but it was a necessary step for growth.

“Norm’s Farm needed a big infusion of capital to scale up,” Ann Lenhardt said. “And these guys had the money.”

The due diligence portion of the sale process could be intimidating and overwhelming for first-timers, Rodger Lenhardt said. Typically, you’d need legal or financial guidance to gather the necessary documents and information for buyers to analyze.

“The buyer is going to want to dig into your underwear drawer,” he said. “If your house is a mess and your financials aren’t in order, you’re not going to get a buyer.”

What is due diligence?

The purpose of due diligence is to ensure all information exchanged between a buyer and a seller is accurate and fully disclosed, said Paren Knadjian, who heads the capital markets and mergers and acquisitions group at KROST. Through due diligence, a potential buyer would hire an attorney or business broker thoroughly investigate all aspects of your business.

“It’s essentially understanding how the company operates on a day to day basis,” said Knadjian, who is based in California.

Due diligence typically occurs after the buyer provides a letter of intent, a non-binding two- or three-page document outlining the terms of the transaction, including how much would be paid for the business. The letter of intent would state that the proposed terms of the deal would be subject to due diligence.

The complexity of both the deal and your business records would determine the length of the due diligence process, although the average time frame is 30 to 90 days, Knadjian said. After due diligence is complete the buyer would then draw up legal documents to finalize the sale.

Do sellers investigate buyers?

Sellers should do their own due diligence on the prospective buyer as well, Knadjian said. The process would be less formal, but it would provide insight into the company that’s buying your business.

The Lenhardts hired advisors to aid in researching the buyer of Norm’s Farms, Ann said. They wanted to make sure the business would thrive under new ownership.

“When you put your heart, blood and tears into a business, you’re attached to it,” she said. “That’s why due diligence on our partners was so important to us.”

Make sure you understand how the buyer plans to pay for your business, and whether they’ll be borrowing money to finance the purchase, Knadjian said. If you plan to stay involved with the business after the sale, either as a shareholder or an employee, you should understand how the debt from the sale would impact operations.

Due diligence preparation for small business owners

Before putting your house on the market, you would likely spruce up the property to make it more attractive to buyers, Knadjian said. Consider doing the same for your small business.

“Knowing what’s ahead of you in terms of due diligence and correcting any errors will speed up the due diligence and reduce the risk of something going wrong,” he said.

Expect a buyer to dissect several areas of your business during the due diligence process. You may be able to request that they sign a non-disclosure or non-compete agreement to protect sensitive information.

Next, we’ll discuss what you can expect to share with a potential buyer.

Legal documentation

A buyer would look into all current and future legal obligations, including outstanding judgments or tax liens, licensing, permits and zoning compliance. Contracts with suppliers and employees would also be up for review.

You may have to turn over any invoices from lawyers from recent years to show what issues had been addressed. If your business is a corporation, a buyer may also ask for shareholder or board meeting minutes to review past company decisions.

Financial statements

Financial information such as revenue, accounts receivable, tax returns, existing debt and stock ownership would be analyzed. Be prepared to submit documents such as:

  • Annual financial statements
  • Cash flow analysis
  • Cash restrictions
  • Expense reports, categorized as non-operational
  • Public filings, if applicable
  • Audited financial statements, including any disclosures or management letters suggesting recommendations

A buyer would check to make sure your business followed Generally Accepted Accounting Principles, or GAAP, when generating financial statements. Companies that adhere to GAAP standards have created their statements using the same set of accounting rules. Meeting GAAP standards would make it easier for a buyer to review your financials, avoiding a potential hitch in the due diligence process.

Business assets

A buyer may conduct an inspection of any fixed assets to determine their value. You’d need to share records of maintenance and replacements and whether any assets are no longer in use.

If any assets like equipment, vehicles or property are being leased, rented or loaned, that financial information would need to be included in the sale.

Operational information

A buyer would analyze the responsibilities of individual departments and how they contribute to overall operations.

Activities related to sales would be under a microscope. A buyer would look into how your business makes sales and how the sales department is organized. The productivity and skill level of the sales team may also be measured.

Your marketing activities would indicate how well you stack up against competing businesses. A buyer could perform a comparative analysis to examine marketing efforts such as:

  • Product packaging and quality
  • Advertising
  • Distribution
  • Pricing
  • Telemarketing
  • Internet marketing
  • Branding

A buyer may dive into your manufacturing practices as well to determine how your business builds or produces goods.

You can find a sample due diligence checklist here.

After due diligence: What to expect

After the buyer completes enough research to feel comfortable making an offer, they would then hire a legal firm to draft documents describing the terms of the acquisition. There may be several documents for you to sign, depending on the nature of the sale. Those could include:

  • Asset purchase agreement: An arrangement where the buyer purchases all business assets, including tangible property like real estate and intangible property such as patents and trademarks.
  • Stock purchase agreement: The buyer purchases the majority or more of a business’s stock and assumes existing debts and obligations.
  • Bill of sale: Document confirming the transfer of ownership on a specific date and at a specific place for a certain amount of money.
  • Employment agreement: Contracts detailing the treatment of employees after the sale, including the terms and obligations of continuing or terminating employment.

“Typically, after [due diligence], the legal documents are negotiated, finalized and signed,” Knadjian said. “When the money is transferred, that’s considered a close and the transaction is done.”

There could be back-and-forth negotiation before the final papers are signed, Ann Lenhardt of Norm’s Farms said. Financial details may be the last item to discuss, which was the case when selling Norm’s Farms, she said.

Business owners often believe the purpose of due diligence is to renegotiate the selling price, but that’s rarely the intent of buyers, who have already included price in the letter of intent, Knadjian said. However, information found during due diligence could affect how much the buyer is willing to pay for the business.

“If you’re well organized, there’s no need to be worried about that,” he said. “It’s considered bad practice to go into due diligence with the intent to change the terms of the deal as the buyer.”

What happens if the deal falls through?

After weeks or months of due diligence, there’s no guarantee a sale will occur. Although the majority of deals are successful, the due diligence process could end in a broken transaction, Knadjian said. A common reason is a lack of organization within the seller’s business.

“The cleaner the books, the better documentation they have, the much more likely that the transaction will go through,” he said.

A broken deal likely wouldn’t have any financial ramifications for either party, other than the loss of time and money spent on advisors and lawyers, Knadjian said. Buyers sometimes make a “good faith deposit” to show their intent to purchase the business, and the seller may not return that money if the sale falls through, he said.

A failed transaction wouldn’t impede your chances of selling the business in the future, unless the buyer found a problem within the operation. As long as you fix any issues uncovered during due diligence, you could attempt a sale again in the future, Knadjian said.

“Obviously, you will have to fix that problem before you go back on the market,” he said. “Otherwise, you’re just wasting your time.”

Don’t fear the due diligence process

It may seem daunting to present the inner workings of your company, including financial statements and legal documents, to a potential buyer, but it may be an unavoidable step when selling your business.

“Nobody’s willing to make an offer until the books are open,” Ann Lenhardt said.

Due diligence typically begins after a potential buyer outlines terms of the deal in a letter of intent. Before then, be careful not to disclose too much detail about your business, Knadjian said. If the interested buyer is a competitor, they may be looking for valuable information to use at their own company.

In most cases, a buyer wouldn’t set out to deceive you, Knadjian said. A buyer would be looking to check the legitimacy of your claims about the business. You should conduct due diligence on the buyer to make similar confirmations.

“I’m assuming you’re operating as an actual company,” Knadjian said. “The point of due diligence is to test those assumptions.”

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Accepting Cryptocurrency for Your Business

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If you think of yourself as an early adopter of emerging trends, you may be wondering how to accept cryptocurrency as payment for the goods and services your business sells. Accepting cryptocurrency could open an additional revenue stream for your small business and help you reach new customers, said Dennis Murphy, Ohio-based certified public accountant and principal at financial advisor firm Skoda Minotti. And some processing services are making it easy for business owners to take Bitcoins and other digital currencies as payment.

However, cryptocurrency is highly volatile, and may not be ideal for risk-averse business owners. Continue reading to determine if accepting cryptocurrency could be beneficial for your business and how to receive this type of payment.

What is cryptocurrency?

Cryptocurrency is a digital exchange currency that uses cryptography to transfer value from one person to another online. It relies on what’s known as the blockchain, a public digital ledger that records all transactions anonymously in chronological order. Using a personalized digital key, anyone can add transactions to the blockchain. This technology secures the exchange of cryptocurrency.

There are thousands of types of digital currencies traded on a daily basis. Bitcoin and Ethereum are among the most popular cryptocurrency, as they have the highest value. Also among the top cryptocurrencies are XRP, Bitcoin Cash and Litecoin.

A small portion of businesses accept cryptocurrency, hovering around 1% to 3%, said Matthew May, co-founder of Atlanta-based financial firm Acuity, and most of these companies accept Bitcoin.

How it works

The value of cryptocurrency is derived from supply and demand. For instance, the more people who want to buy Bitcoin compared to how much is available determines its value. The value of cryptocurrency fluctuates to reflect both factors. Cryptocurrency can be converted into fiat currency, like U.S. dollars, or another type of cryptocurrency.

Only some cryptocurrencies, including Bitcoin, can be directly exchanged for USD. Others must be converted into those types of cryptocurrency before being converted into cash, May said.

Digital wallets hold cryptocurrency and record the value of coins. Wallets also verify transactions and the number of coins in storage. Cryptocurrency storage can be considered “hot” or “cold,” Murphy said. A wallet that is connected to the internet would be hot, while a storage device such as a USB drive would be considered cold.

To trade or make purchases with cryptocurrency, you’d need to keep it in a hot wallet. It’s best to move coins onto cold storage devices if you don’t plan to trade frequently to keep it safe, as online cryptocurrency storage is vulnerable to hackers, Murphy said.

Accepting Bitcoin as payment

Anyone with a cryptocurrency wallet could individually transfer Bitcoin to another person. To accept a payment, you would need to display a QR code that connects to your wallet, which the other person would scan to transfer Bitcoins to your account. You wouldn’t owe a fee for accepting cryptocurrency payments, though some wallets charge a fee for spending.

You could also accept cryptocurrency in a way that is similar to accepting credit cards and allows you to convert your coins into cash. You’d need to sign up for a payment processing system that would simplify the process of receiving cryptocurrency, May said.

BitPay

A common option for businesses is BitPay, a payment processor designed specifically for Bitcoin transactions. Businesses can accept Bitcoin payments online, via email or in person using the BitPay app, which we’ll describe in more detail, below.

Businesses that frequently make international transactions could benefit most from a service like BitPay, May said. Exchanging cryptocurrency could be a less expensive option for selling goods and services across borders, as the exchange rates for fiat currencies wouldn’t apply.

“It might be easier for somebody to get Bitcoin than the U.S. dollar,” May said. “It might be cheaper for them.”

To sign up for a BitPay merchant account, you would need to submit an application with your business name, address, industry and website, as well as a few personal details like your name and date of birth. BitPay charges a 1% fee on each transaction and allows unlimited monthly transactions. You can choose to receive payments in Bitcoin or a fiat currency of your choice, including USD, and BitPay would make the exchange for you.

Payments made through BitPay wouldn’t be subject to price volatility, and you would receive the exact amount that you charge minus BitPay’s 1% fee, regardless of the change in value of Bitcoin. For online transactions, BitPay provides payment buttons, embeddable invoices and check out services for your website.

How to use the BitPay app

If you want to accept Bitcoin payments in person, you could use the BitPay Checkout app for Android and iOS devices. When using the app, you would enter the amount owed and BitPay would generate an invoice for your customer. A QR code would appear on your device, and the customer would scan the code to access and pay the invoice from their device. Customers would pay directly from their own Bitcoin wallets.

Several cryptocurrency apps provide the same service and could integrate with your current POS system. Coinbase, Coinkite, MyEtherWallet and Sia wallets provide apps that facilitate transactions for different types of cryptocurrency. Customers could scan a QR code, manually input a code or otherwise connect with your device to pay you in cryptocurrency.

Converting cryptocurrency into cash through a service like BitPay as soon as you receive a payment would be a smart strategy if you don’t have much experience with digital currency, Murphy said. You wouldn’t have to worry about a change in value that could occur if you hold onto coins.

“That’s the best thing to do if they want the easiest compliance, easiest reporting and easiest accounting,” Murphy said.

We’ll dive into compliance and reporting in the next section.

The advantages and disadvantages of accepting cryptocurrency

ProsCons
  • Anyone can make or accept a cryptocurrency payment.

  • Lack of regulation may leave users with little recourse in case of theft.

  • You could hold onto coins as an investment.

  • You may need to pay taxes and report any gains or losses you incur. Cryptocurrency could lose value if you wait to convert to cash.

  • BitPay and other services could immediately convert cryptocurrency payments to cash.

  • Services like BitPay charge a fee to accept payments and convert currency.

Legal and tax implications

Because cryptocurrency is decentralized and transactions are considered peer to peer, Bitcoin and other coins aren’t subject to the same treatment as money in a bank, Murphy said. But you still must meet IRS requirements if you accept cryptocurrency in a business transaction.

The IRS treats cryptocurrency as property, similar to a stock, bond or other trading security that can be sold for a profit, Murphy said. Each time you sell or recieve cryptocurrency, you must report any gains or losses you generate from a cryptocurrency transaction, he said.

If you keep cryptocurrency for too long after a business transaction, you may need to report a personal gain or loss from that payment. For instance, if a customer paid you $10 in cryptocurrency for a notebook, but the currency appreciates to $15 before you convert it to dollars, you would then need to report a capital gain because the original sale was recorded as $10, Murphy said. If you converted the $10 into cash right away, you wouldn’t need to worry about recording an additional gain or loss based on market fluctuation.

“It’s best if business owners convert it into USD and don’t ever see the cryptocurrency,” Murphy said.

However, it is legal to keep a cryptocurrency payment in coin form as an investment, Murphy said. You could even convert a portion to cash and keep the rest as coin. You would just need to make sure you accurately report how much you earn or lose from that investment.

Third parties that handle digital currency transactions on behalf of businesses must issue a 1099-K form to merchants summarizing all payments. BitPay, for instance, would report the USD equivalent of your transactions to the IRS and send you a 1099-K with the same information.

You would only receive a 1099-K form detailing your transaction history if you’ve received more than $20,000 and made more than 200 transactions throughout the year. The purpose of a 1099-K is to help you make sure you accurately report your business income when filing income taxes. It would be your responsibility to report any gains or losses from cryptocurrency when you file your income taxes, Murphy said.

“It’s all voluntary,” he said. “It’s all self-reporting up to this point.”

If you fail to properly report income received through cryptocurrency transactions, you could face an audit or more extreme penalties. You could be subject to criminal charges such as tax evasion or filing a false tax return, which could result in three-to-five years of prison time and a fine up to $250,000.

The federal government in the U.S. does not recognize cryptocurrency as legal tender, but cryptocurrency exchange is regulated at the state level, although at varying degrees. While some states have not issued any guidance regarding digital currency, others require businesses to obtain special licenses to handle Bitcoin and other cryptocurrency. Check your local laws or consult an attorney to ensure you remain compliant when accepting digital currency.

Is cryptocurrency right for your business?

The main factor to consider before accepting Bitcoin or other digital coins is whether your customers or clients want to make payments with cryptocurrency, May said.

“If you’re an early adopter, you’re probably already in,” May said. “If customers aren’t asking for it, I wouldn’t worry about it right now.”

If you do have customers ready to pay with digital currency, it wouldn’t hurt to set up an account with a service like BitPay, Murphy said. You may find it’s more affordable than accepting credit cards. BitPay charges a 1% fee, while major networks like MasterCard, Visa, Discover and American Express charge average credit card processing fees of 2% or more.

“For those businesses looking for ways to reduce payment processing fees, it’s good for that,” Murphy said. “Just make sure it’s done securely.”

Payment processors like BitPay reduce risk for business owners accepting Bitcoin, as it can immediately convert payments to cash. If you don’t hold onto coins for personal investment, you wouldn’t need to worry about a change in the value of the currency or reporting capital gains or losses when filing taxes.

Cryptocurrency is far from becoming a replacement for standard currency, May said, so business owners shouldn’t feel pressured to accept Bitcoin or other coins as payment. But digital currency could become mainstream in the near future, he said. It may be worthwhile to learn more about how cryptocurrency could potentially benefit your business.

“Think about how little cash you carry around versus ten years ago,” May said. “I think it’s coming – it’s just a matter of when.”

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How You Could Win an SBA Small Business Week Award

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Each year in May, the U.S. Small Business Administration hosts National Small Business Week, and the federal agency honors outstanding small business owners across the country as part of the event. Past winners of SBA Small Business Week Awards include the owners of Ben and Jerry’s, Chobani, Callaway Golf, Dogfish Head and Tom’s of Maine.

Mubarakah Ibrahim was named the 2019 Connecticut Home-Based Business of the Year. Ibrahim is the owner of Mmm Pies and Gourmet Dessert in New Haven, Connecticut where she sells homemade bean pies to local retailers, including a nearby Whole Foods. A bean pie is a traditional African-American dessert made from mashed navy beans, with a texture similar to sweet potato pie, Ibrahim said.

While the contest doesn’t come with a cash prize, it does mean major bragging rights for businesses that win in their state or at the national level. Continue reading to craft your winning nomination for your own SBA Small Business Week Award.

Ibrahim, a longtime health fitness trainer, started the business in 2016 shortly after making her first bean pie. One afternoon, Ibrahim had a craving for the treat she used to enjoy as a child in Brooklyn, New York, but realized there were no businesses in New Haven that sold bean pies. Ibrahim tweaked recipes she found online until satisfying her craving, sharing her bean pie journey with her social media followers.

“I found there was a demand for it,” she said.

Ibrahim now bakes pies in a rented commercial kitchen, but the business is officially based at her home address. She was nominated for the award by the Women’s Business Development Council in Connecticut; “it made me feel my efforts are paying off,” she said about her win.

What is National Small Business Week?

The SBA has recognized the efforts of entrepreneurs and small business owners for more than 50 years.

During National Small Business Week, the SBA hosts a free two-day virtual conference consisting of online workshops and networking. Business owners can participate in all webinars or choose topics that are of interest.

“National Small Business Week is not only an opportunity for us to recognize small business owners and those who champion the cause, but it’s also a learning opportunity,” SBA Georgia District Director Terri Denison said.

The SBA also hosts a hackathon in partnership with Visa. The event encourages entrepreneurs to spend a weekend brainstorming to solve business challenges. The theme of 2019’s hackathon was disaster relief.

To add a social media component, the SBA facilitates a Twitter chat about starting and growing small businesses. Anyone can join the conversation using the hashtag #SmallBusinessWeek.

National awards are given out at a ceremony in Washington, D.C., while SBA District Offices in each state host their own events to recognize local winners.

Next, we’ll discuss the various awards available to small business owners.

How to win an SBA Small Business Week Award

A number of national honors are awarded to business owners and supporters each year. These include:

  • Small Business Person of the Year
  • Small Business Exporter of the Year
  • Phoenix Award for Small Business Disaster Recovery
  • Phoenix Award for Outstanding Contributions to Disaster Recovery – Public Official
  • Phoenix Award for Outstanding Contributions to Disaster Recovery – Volunteer
  • Federal Procurement Award – Small Business Prime Contractor of the Year Award
  • Federal Procurement Award – Small Business Subcontractor of the Year Award
  • Federal Procurement Award – Dwight D. Eisenhower Award for Excellence
  • 8(a) Business Development Program Graduate of the Year Award
  • Small Business Development Center Excellence and Innovation Award
  • Veterans Business Outreach Center Excellence in Service Award
  • Women’s Business Center of the Year Excellence Award
  • Jody C. Raskind Lender of the Year
  • Small Business Investment Company of the Year

Each award has its own nomination form and requirements. For example, the 8(a) Business Development Program award is given to a business that has participated in the program designed for disadvantaged businesses. You can find the downloadable forms here.

The awards vary slightly at the state level, and some states may have more or fewer categories than others. In Connecticut, where Ibrahim won Home-Based Business of the Year, the available awards are:

  • Small Business Person of the Year
  • Minority-Owned Business of the Year
  • Women-Owned Business of the Year
  • Exporter of the Year
  • Jeffrey Butland Family Owned Business
  • Manufacturer of the Year
  • Veteran Owned Business
  • Microenterprise
  • Home Based Business
  • Women’s Business Center of the Year

In Georgia, the awards are similar, with the addition of awards like Rural-Owned Small Business of the Year, Young Entrepreneur of the Year and Second-Chance Hiring Champion. There are even some given to small business supporters, like Small Business Media Advocate and Women in Business Champion.

“That’s to recognize individuals who may or may not be business owners who support and advocate on behalf of small businesses,” Denison said.

Nominations typically open during late summer or fall, Denison said, although nomination forms for the 2020 awards are not yet available. Eligibility is not limited to businesses that have received financing or other support from the SBA — any business owner could be nominated.

Winners are selected based on the nomination packet that’s submitted, Denison said. In Georgia, a three-person committee reviews each nomination and chooses who best meets the criteria for each award, she said. Small business owners may nominate themselves, but most are nominated by others. A consulting firm, chamber of commerce member, lender or Small Business Development Center that the business owner has worked with are typical nominators, she said.

The Women’s Business Development Council in Connecticut was familiar with Ibrahim’s business because she previously attended WBDC workshops and sought help managing her operation.

“I needed help with the financials more than anything,” Ibrahim said. “I got a lot of benefit from consulting with them.”

Making an impression when working with business consultants, as Ibrahim did, could boost your chances of being nominated for an SBA award, Denison said. Your community impact or personal experience could also increase your odds of winning.

“If the owners have gone through difficulties on their entrepreneurial journey and have managed to overcome them and managed to be successful, that always makes for an interesting story,” Denison said.

Whether you’re nominating yourself or another business owner, the SBA provides these tips for submitting a winning nomination form:

1. Aim to win an award that best suits your business. Rather than going for Business Person of the Year, the SBA’s signature award, you could try your luck in more niche categories, like exporting or disaster recovery.
2. Make sure the entire nomination package is complete. All packages must include a completed background form for the nominee; the nomination form, including information about the business, like address and financial history; and a photo of the nominee. Certain awards may require additional information.
3. Brag about the business. The nomination package should highlight reasons why you’re among the best in your industry and how you plan to further your success.
4. Describe contributions to the community. Explain how you give back to your community, whether it’s through monetary donations or volunteered time.

Ibrahim was aware the WBDC nominated her for an SBA award because they asked her to provide some information for the nomination form, she said. After her local SBA District Office notified her that she won, representatives visited her commercial kitchen to see the business in person, Ibrahim said.

Each SBA District Office hosts its own awards ceremony. The Connecticut SBA District Office recognized Ibrahim and the other award winners during a luncheon in May, while in Georgia, the local SBA office also organizes an annual luncheon to honor award winners, Denison said.

Other national contests

You may want to consider entering your business into additional national contests or award programs, some of which offer prize money. Here are a few to check out:

  • U.S. Chamber of Commerce Dream Big Awards: For community-focused businesses with fewer than 250 employees and less than $20 million in gross revenue; $25,000 prize available. The Chamber will name 2019 winners in October.
  • FedEx Small Business Grant Contest: Eligible small business must have fewer than 99 employees and at least six months in operation; a grand prize of $50,000 plus $7,500 in FedEx services is available. FedEx will begin accepting applications in early 2020.
  • EY Entrepreneur of the Year: Regional programs recognize top local entrepreneurs; national honorees are also named. Nominations for the 2020 Ernst & Young contest open in December.
  • Grant programs: Federal and private grant programs offer no-strings-attached funding to qualifying businesses.

Benefits of winning an SBA award

Receiving a National Small Business Week Award from the SBA could increase your company’s visibility. For example, the Georgia SBA District Office sends out a press release each year announcing the winners, which could lead to additional media opportunities, according to Denison.

Attending the awards ceremony could also be a valuable networking opportunity, noted Denison. You could connect with other award winners, as well as members of your local business community. A number of SBA lenders usually attend the luncheon in Georgia, she added.

Ibrahim made useful connections through the SBA committee that selected her for the award. During the visit to her bakery, Ibrahim told the committee about her plans to ship bean pies to customers outside New Haven. However, she couldn’t find a shipping solution that made financial sense for her and for customers.

“They would literally have to pay for $500 worth of pie to make it affordable,” she said. “That’s my biggest dilemma now.”

The SBA committee referred Ibrahim to a company that could ship smaller orders of pies for a less expensive price, Ibrahim said, which wouldn’t have happened if not for the SBA award; she currently ships throughout the state of Connecticut.

“It did connect me with resources and put me on other people’s radar,” she said.

The Home-Based Business of the Year award didn’t come with a monetary prize, but Ibrahim said she felt validated receiving the honor. Although her business has many fans in her community, it’s often challenging to get her bean pies in stores.

“It can be very disappointing when you call and ask someone to carry your product and the answer is ‘no.’ Because the answer hasn’t always been ‘yes,’” she said. “Getting the award gave me the encouragement to keep going.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.