The Grants Myth: Contrary to popular belief, there are no grants available at the local, state, or federal level for small business start-ups. With such a high failure rate for small business start-ups, it would be risky business (to say the least) for the government to invest in every new business that came along. However, there are many low-interest loan opportunities available through local banks, private investors, and the Small Business Administration (SBA). 

No Easy Answer: Unfortunately, there is no easy solution for finding money to start a business. Any investor will want to see that your business is viable and will want assurance of gaining the money back. Your task, as an entrepreneur, is two-fold. First, you will need to complete all the footwork necessary to lay a solid foundation that ensures the success of your business. Investors will want to dissect your business and understand how it works before lending any money. Second, you will have to educate yourself on what investors look for and how to best present your business to the investor.

Raising Your Own Capital – Getting Started: When starting a business, one important consideration is where to obtain capital to start your venture. Most start-up businesses require a capital contribution by the entrepreneur, usually 20%.  As you start your new business, be prepared to contribute 10 – 20% of the total start-up costs from your own personal funds. 

Friends & Family:  Before you begin seeking any type of loan, you may want to keep things simple. In the beginning, it may make the most sense to “enlist” the help of your friends and family to cover the smaller costs of getting started. Make sure that expectations are established upfront. This may help preserve your personal relationships later on if your plans change. At some point, your needs will grow, and you may need to seek outside capital in the form of loans (Banks, SBA) or private investment (angel investors).

Traditional Financing – The Next Steps: The remaining financing may be available from local banks or may require private investors. Most small business loan officers want to see that the entrepreneur has some sort of personal stake in the business start-up, usually 10 – 20% of the total start-up cost. A financial commitment on the part of the entrepreneur shows the bank that the new business owner is serious and committed to the success of the new business. A list of local banks and lending institutions can be found on the Chamber website, www.romega.com, using the Business Directory tab at the top of the homepage.

Alternative Financing – If you find that your new business is ineligible for traditional financing, don’t give up! You may be able to find adequate funding from alternative sources. A few alternative financing options are listed below.

Appalachian Community Enterprises:As an alternative to traditional bank loans, ACE provides microloans from $500 to $35,000 to small business owners who are unable to access traditional capital. ACE partners with banks for gap financing up to $50,000 as well. With these loans, ACE also offers financial literacy education to help adults outside the financial mainstream enhance their money skills and create positive banking relationships. For more information, visit www.aceloans.org.

SBA Loans:  If you are unable to secure a loan from a bank, there are also several Small Business Administration loan programs available to businesses, all of which require bank participation. These loans are backed by the federal government, though you will still work with a local lender to establish the loan. For more information on SBA loan programs, refer to the “Entrepreneurship Guide” or visit the SBA website at www.sba.gov.

Angel Investors:  An alternative to traditional means of funding, many entrepreneurs seek out the investment (and mentorship) of other seasoned entrepreneurs. “Angel investors” are often seasoned, “been-there-done-that” entrepreneurs who are willing to invest in a business start-up. Many angel investors belong to formalized angel networks or funds that screen deals, conduct due diligence, and take an active role in their investments. Angels provide both their money and their expertise. Most often, angel investors seek to invest in high-growth or technology-based companies, though some are often willing to consider other business models. Contact the Greater Rome Chamber of Commerce for more information on angel investors.