Funding Guide

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Funding Guide

Many funding opportunities require a solid business plan. Review the Startup Guide for tips and tricks to best assist in writing or strengthening your business plan.

Each county has a Small Business Development Center (SBDC) that can help you determine your startup or expansion financing needs. They also provide counseling for business planning, marketing, and more.

Looking for Funding

It is very difficult for a “start-up” business to attract funding from a traditional bank.  Most banks will require a personal guarantee and some type of collateral, such as your home.  Most new businesses rely on investments from friends, family, or personal savings to start a business.

Think about and research the questions below before deciding on the best funding options for your business.

What does my financial world look like?

  • The money you might need as a startup business may be different from what a more established business will use. The type of industry sector your business is in can affect the type of financing available. The more you understand about your industry and current financial needs, the easier it will be to identify the programs that make the best fit.

SBA offers a FREE web series – Financing Your Business

How much money do you need to start?

  • No two businesses are exactly alike. The money needed for startup funds can vary from location to location. It is important that you understand what your financial needs will be before looking for funding options. This can include ‘seed’ money, to help cover the costs of doing business in the first few months of operation, as well as funds to cover ongoing fixed expenses (rent, utilities, administrative costs, etc.) and variable expenses (inventory, shipping costs, sales commissions, etc.).

Tools to help identify your financial needs:

What will you use the funding for? (Is that amount absolutely necessary?)

What will a traditional lender look at during the loan process?

  • Your credit risk – commonly referred to as “5 C’s”:
      • Credit History
      • Capacity
      • Collateral (When applying for secured loan)
      • Capital
      • Conditions

What is your plan for how you will pay it back?

What Financing Programs are available?

  • Find out what financing opportunities might work best for your business.
    • Friends and Family
    • Types of Loans
    • Private Capital
    • Grants

Friends & Family Funding

You, your family and friends are the main source of funding at this stage. You may also consider using your personal savings, a home equity loan, or borrowing against your insurance policy as a place to start. The following articles give some timely tips on using personal resources to fund your business.

Types of Loans Available

Commercial bank loans don’t require entrepreneurs to turn over equity or company control. In general, banks prefer to make loans of more than $10,000. Banks like to see:

  • Good credit
  • A solid business plan
  • Ability to repay the loan
  • Collateral

Private Capital

Angels give wings to entrepreneurs. They provide seed money to business startups—to the tune of tens of thousands to a million dollars or more—in exchange for convertible debt or ownership equity. Some angel investors come together to form angel groups or angel networks to share research and pool investment dollars.

Venture capitalists (or VCs), on the other hand, usually make their capital investments later in the business cycle. They exchange their investment and their expertise for a significant portion of the company’s ownership and significant control over company decisions.

BizLink Orange has a Resource Partners who offer assistance in finding private capital opportunities in Central Florida.

For more information, visit our Private Capital guide.

The Truth About Government Grants

Most grants are for nonprofit organizations, not small businesses.

Be aware of advertising suggesting a list of grants if you pay. Often this is a list of microloan programs – which you must repay – or grants for nonprofit agencies.

The federal government offers a few very competitive and targeted grants to companies developing various targeted technologies (often high technology).

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants fund research and development efforts of a high-risk nature that may have excellent commercial potential.

Small U.S. businesses are eligible to participate in the SBIR/STTR program if they are for-profit and have 500 or fewer employees. Nonprofit organizations are not eligible.

For more information, visit our Grant guide.