By Kevin Scanlan, Certified SCORE Mentor
One of the biggest challenges facing business owners is finding start-up and interim capital. My clients have used several sources to secure capital, usually requiring a combination of two or more.
Self-funded. Usually owners need to have “skin-in-the-game,” using some of their own money as capital for the business. Typically, this is only one source of funding.
Family/friends. Family and friends are frequently a source of capital for a new or existing business. I’ve seen this take many forms: out-right gift, low interest loan, equity, or silent or active participation in the business.
Angel investors. There are firms and individuals who will invest in both start-up as well as existing businesses. These investments can be carried by the company as debt or may be offered in exchange for equity in the business.
Crowdfunding. Crowdfunding is typically an internet–based platform where business owners seek individual investors who commit a much smaller amount of resources than angel investors. Some examples of these platforms include Seed Invest, GoFundMe, AngelList and Crowdcube.
Public/private grants. There is a variety of public and private funding sources for new and existing business. The City of Chicago Small Business Center offers a variety of grants. The State of Illinois also provides a variety of grants, some that are industry–specific. Special grants are available for military veterans, and women-owned and minority–owned businesses. The Small Business Administration (SBA), which is a Resource Partner of SCORE, has the Small Business Investment Company and also offers Federal Finance Assistance Grants in a variety of industries. Connect with the SBA at sba.gov. Private companies and foundations also offer grants. Examples are the Coca-Cola Foundation, FedEX Small Business Grant Contest and Lending Tree Small Business Grant Contest.
Loans. The SBA) offers are variety of loans for small businesses through several local, regional and national banks. Go to sba.gov to learn more. Several local, state and federal government agencies also offer loan programs. Private organizations including Accion (accionchicago.org), Kiva (kiva.org) Kabbage (kabbage.com), Bluevine (bluevine.com) and LendingClub (lendingclub.com) also offer loans.
Note: References to private grant and lending organizations are simply offered as examples and not as endorsements from me or SCORE.
People with business questions are welcome to contact me at firstname.lastname@example.org for assistance. My office hours at the Beverly Area Planning Association (BAPA) are on most Tuesday and Thursday mornings.