Small Disadvantaged Business May Get Leg Up in Broadband Stimulus

WASHINGTON, November 12, 2009 - While the economy is slowly turning itself around, small and disadvantaged businesses face problems gaining capital, according to panelists speaking at the Federal Communications Commission national broadband plan workshop on November 12.

Small disadvantaged businesses are businesses that are at least 51 percent owned or controlled by an individual or a group of individuals who are deemed as economically or socially disadvantaged. They are deemed disadvantaged by the Small Business Administration.

Businesses with this status struggle to gain any form of capital, and that does not give these businesses a foothold to hang on to in troubled times. However, such businesses may be eligible for grants and loans.

Within the $7.2 billion devoted to broadband stimulus funding, “Additional consideration is given for small and disadvantaged businesses,” said Maureen Lewis, director of Minority Telecommunications Development Program at the Commerce Department’s National Telecommunications and Information Administration, which is administering the program.

However, while small disadvantage businesses might receive a different level of consideration when it comes to the funding provided by the American Recovery and Reinvestment Act, they don’t also get a break in the private sector.

“Funding doesn’t always have to come out of the Universal Fund,” said S. Jennel Trigg, member of the Lerman Senter.

Validation, history, and an understanding of what form of capital a business is seeking are key factors that venture capitalist look at before investing in a small disadvantaged business.

According to Thomas Reed, director of the Office of the Communications Business Opportunities, FCC, the presentation of the companies needs to be set strong, “putting their best foot forward.”

For Opportunity Capital Partnerships, the understanding of capital has to be seen in every aspect of the company.

“We want companies who hold a dominate market position,” said Anita Stephens Graham of Opportunity Capital.

Being a “volatile industry and looking for credit,” holding a dominant position in the market has become a challenge.

According to Dwight Bush, managing partner of D.L. Bush and Associates, having a good business plan is not enough to make a company appealing to investors. They must have a history of keeping up with the plan.

For the speakers and video, click here.