Other Financing Options

Posted on by Prapti

There may come a point in your research where you realize that grant opportunities will not be available

for your business at this time. Never despair as an opportunity may present itself as your business

progresses. In the meantime there are many options for acquiring low interest business loans.   In the

event a new entrepreneur cannot access conventional lending institutions, there are other avenues for

acquiring low interest business loans from other sources.


One such organization is the U.S. Small Business Administration (SBA) at:


The SBA has a number of loan programs designed specifically for small businesses. Three of their core

small business loan programs are:

• The Basic Loan – available for both start‐up and expansion. The maturity on these loans is

generally up to 10 years for working capital and 25 years for fixed asset loans. The loans can be used for

a variety of things such as machinery or equipment, the purchase/renovation/construction of land and

buildings, furniture and fixtures and in some specific cases for debt refinancing.

• Microloan Program – The microloan program focuses on non‐profit childcare centers and other

small businesses that require smaller amounts of financing for such things as start‐up, expansion or

technical assistance. These are generally short‐term loans of up to $35,000.

• The 504 Loan Program – These loans are geared to small businesses at fixed and long‐term

rates. They can be used for the purchase of equipment to expand a business or for real estate


Many local non‐profit and government agencies also make loans available directly to a business. Your

local Secretary of State office or Chamber of Commerce will have resources for more detailed

information on such small business loans. Even if your company is not immediately looking for financing,

a small business credit card is an excellent tool for establishing and building a positive credit rating. It is

highly recommended that a company credit card be used strictly for business purposes.


Many states offer SBA small business loans that come with subsidized rates and other small business

incentives such as tax breaks. Below is a sample of some state incentives that

are available and even if your state is not listed below, remember that all states throughout the US offer

some form of incentive which can be found on your Secretary of State

website.  23

New York

• New York City Financial Network Action Consortium

• New York Business Development Corporation


• The Ohio TechAngels

• TechColumbus


• Arizona Innovation Accelerator Program

• Expansion Assistance And Development (EXPAND) in Phoenix


• California Capital Access Program

• Industrial Development Revenue Bonds

• Small Business Loan Guarantee Program

• Women’s Economic Ventures Small Business Loan Fund


• Certified Capital Companies (CAPCO) Programs

• Mesa County Business Incubator


• Delaware Access Program


• Minority, Women and Disabled Participation Loan Program


• Target Small Business Assistance Program  24


• Michigan Economic Development Corporation

Before going to any institution for a small business loan, it is important to understand everything that a

lender will need from you in order to qualify for a loan. You will first need to determine if you are

seeking equity or debt financing.

• If your business has a high equity to debt ratio, your best option may be to look for debt


• Equity financing is a form of raising money without acquiring any debt. This is done by offering a

share of ownership in your business for money from investors.

The Small Business Administration website offers a more detailed explanation regarding debt and equity

financing. A lender will require your repayment ability, credit history, collateral, investment and

management experience, all of which are items that you will have researched and put into your business



As you acquire new information and review what you already have, you will suddenly see themes and

trends starting to emerge. You may realize that if you alter the primary focus of your business or change

your business structure more grant or financing opportunities would be available. This will enable you to

narrow your research and focus. Take some time to read about the organizations that offer grants in

your particular field. Getting to know how they operate and the type of work they are involved in will go

far when you are putting in a request for a grant and outlining the focus of your Executive Summary in

your business plan. Since government bodies and other granting organizations all stipulate precisely

how their money can be used, it is a good idea to review their application process. The following chapter

will give you helpful advice in the area of applications.

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