What are your funding options as a small business?|

Ariana Ulloa-Olavarrieta
LIGHTS Regional Innovation Network
Ohio University

As a business owner, it’s not a matter of if you’ll need funding but when.  So what options exist for financing?

As you start your business, it’s important to develop a relationship with a banker because this will be your advocate when it’s time to apply for a business loan.  The banker will tell your story to the underwriter and help them to understand your need for financing and any hiccups you’ve had along the way.

As a business owner, you walk a fine line between being bankable and paying taxes.  As you hire a CPA to work with you on your financials and taxes, make sure that they have your long-term best interest in mind. While no one likes to pay taxes and their job is to minimize your tax payments by writing off all expenses, be sure you and your CPA have a long-term plan for financing.  As a business owner, when you go request a loan from a bank, the banker will ask for your last 3 years of taxes.  This is what they will base the strength of your business on and determine if your business is capable of paying down the new loan.  So, if your business has written everything off and is barely breaking even or at a loss, you will not be approved.

The Small Business Administration (SBA) offers guarantees on loans that aren’t approved conventionally BUT you must get approved through your local bank first in order to qualify for the SBA guarantee. Once a bank receives your financing request and they are uncomfortable with the risk of your loan (because of length of time in business, tax returns, type of loan etc), they will suggest an SBA guarantee. For more information on these types of loans, visit www.sba.gov. Also keep in mind that you’ll need to have a down payment of at least 10-20% of your total loan request and personally guarantee the debt as the business owner.

For smaller loan needs, KIVA provides funding up to $10,000.  It’s based on a crowdfunding platform where KIVA users throughout the country loan you money with 0% interest.  The idea behind this platform is that you are more likely to pay the money back if the first 10-30 lenders are your friends and family (which is the first step). Check out www.kiva.org for more information. As a KIVA trustee, we can also guide you through this process.

Look for economic development organizations that could provide you with funds.  Many regional and local organizations have revolving loan funds specifically for small business owners.

Some examples are:

OMEGA www.omegadistrict.us
Athens Cty Economic Development Council www.athenscountyohedc.com
Buckeye Hills https://www.buckeyehills.org/business-workforce
Athens Foundation for women businesses www.athensfoundation.org

There are quite a few lending possibilities for your small business. Don’t get overwhelmed.  Give us a call and we’ll help you determine the best funding option(s) for you!

About Us

The LIGHTS Regional Innovation Network catalyzes the creation of companies to create high-wage jobs and attract greater private investment in the coal-impacted and opioid-impacted regions of Ohio, West Virginia, and Kentucky, uniquely matching the complex problems and opportunities facing our corporations, communities, and individuals to a network of strategically-placed Innovation Gateways. From this, new marketable products grow from these challenges through our work with locally partnered Innovation Gateways’ business incubators and makerspaces, across a tri-state 28-county area.