In today’s economic environment, most fledgling
entrepreneurs automatically assume that they will not be able to receive
approval for traditional financing from lending institutions. Establishing commercial credit is very
difficult to do as a small business owner.
But there are various sources of funds that could be explored, versus
depleting your savings and/or retirement accounts. In this blog post, I’ll review 2
organizations that can provide much needed capital for a new venture.
This organization states that they are “the voice of
microbusiness” and that it “creates economic opportunity for underserved
entrepreneurs”. The website notes that
they help to guide entrepreneurs to financing sources, provide information on
potential mentors and host a platform for members to promote their products and
services. There is a search tool to assist small business owners in locating a
variety of resources in their area. They
also provide fact sheets and statistics related to the microbusiness
arena. One article on the site
highlighted an entrepreneur that received a $15,000 award and how those dollars
helped to further their efforts. The
Catalyst Initiative is another avenue that provides support to small business
owners, including access to growth capital.
Members also gain access to Bankers without Borders™. In terms of qualifications for micro
financing, you need to be a business with no more than 5 employees and require
no more than $35,000-$50,000 in capital.
The mission of this organization is to “help low- and
moderate-income people and communities achieve financial independence through
credit unions.” They focus on revitalizing low-income communities and job
creation. The Federation invests
millions of dollars in CDCUs, who can then loan those dollars to provide
economic development. To be a member of the organization, you must be a credit
union. But in order to receive the
benefits of this program, you simply need to be a business in a low-income
neighborhood. With this in mind,
consider applying at a small, neighborhood credit union as a financing option,
versus a large commercial bank. They
will most likely have dollars allocated for start-up businesses.
There are advantages and disadvantages of alternative
funding sources.
Advantages
·
Fewer requirements versus traditional financing
·
You may receive additional resources such as
mentoring and hands-on involvement
Disadvantages
·
You may be required to release some portion of
your ownership
·
If the investment is in the form of a loan, it
may have higher interest rates
These are just two examples of alternative sources of
start-up funds for your business. Don’t
be discouraged when more traditional routes do not seem to be receptive to your
business plan, keep searching for other ways to bring your dream to
reality. Research your options carefully
to determine the best option for your business.
Take Care,
D Leigh
References:
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