A loan proposal for the SBA is generally more complex and requires more documentation than one for banks. Typically, venture capital firms are interested in investing in those businesses that have significant growth potential. An entrepreneur is more likely to receive a serious hearing from a venture capitalist if the venture firm learns of the business through referral by bankers, brokers, attorneys, accountants, or investors in a strong marketing plan. They will also closely examine the qualifications of the management team. Private venture capital firms may be found through the Yellow Pages of major cities.
Many firms invest regionally and even nationally.
A public-private group organizes itself as a CDC to sell debentures, raising capital for small businesses in its state or local geographic area. After meeting certain requirements, the group is certified by the SBA as a CDC and its debentures are fully guaranteed by the agency. The guarantee reduces the investor's risks, which lowers the debentures rate of interest and attracts purchasers. In the end, all of this means lower borrowing costs to small businesses. The CDC makes loans to small, independent for-profit businesses.