Archive for August, 2010
A majority of the start-up businesses that come through our doors inquire about grants, loans, and initial funding. Answers to these questions are often hard to give. There is a widespread notion that there is money out there for people looking to open a hair salon or consulting firm or whatever it might be. Unfortunately, that is not the reality.
Government grants are given out for research, for non-profits, and not much else (i.e., not for commercial ventures). Even if you happen to be starting a non-profit, grants are often hard to secure, and there are some pretty particular reporting requirements in order to maintain that funding.
Sometimes grants are allocated to small businesses in industries like childcare or green technology through state or local organizations, but they often require matching funds or other combined financing. Business.gov offers this online tool to search for grants you might qualify for.
Loans, on the other hand, are pretty widely available to small business start-ups. Here are some resources:
SBA 7(a) Loan Program guarantees small business loans from banks and other lending institutions for both start-up and existing small businesses. This is the most common option for SBA guaranteed loans and because most banks and some other commercial lenders participate, loans are widely available. While the lender agrees to structure the loan, it shares the risk with the SBA, making it easier to make loans to small business owners. Find out more about the 7(a) Program on the SBA website.
SBA Micro-Loan Program is another lending option with the SBA that provides. These are small, short-term loans that average $13,000 and max out at $25,000 and are distributed through community organizations with SBA funds. Find out how to apply for an SBA micro-loan here.
New York State’s Community Development Financial Institution Assistance Program (CDFI) provides micro-loans to business owners who may not qualify for bank loans, as well as minority and women-owned businesses. CDFI also offers one-on-one counseling and business development assistance to facilitate credit-readiness. Click here to find more information and a list of participating financial institutions.
New York Business Development Corporation (NYBDC) is an organization that works in partnership with lending institutions to provide term loans, many of which do not meet the requirements for traditional financing. NYBDC, a WBC resource partner, handles lending for non-profits, veterans, women and minority-owned businesses, business located in Empire Development Zones, and other conventional business ventures. Find out more about these services on the NYBDC website.
What has been your experience looking for grants and loans as a small business owner or start-up? Leave a comment.