Get Funding
Estimate the Amount of Funding You Need
To secure financing for your business, start at the beginning: how much funding do you need and for what?- Tips on estimating startup costs (SBA)
- Online startup costs calculator (Bplans.com)
- Small Business Development Center (SBDC) counselors can also help you determine your startup or expansion financing needs
Determine the Best Source of Funding
- Overview of business financing (BizFilings by CT)
- Quick Pick chart of funding sources based on stage of business (BizFilings by CT)
Put Together a Business Plan
Most funding sources will want to see a clear plan for your business. Get started with your business plan.
The Truth About Free Government Grants
I need a grant for my business. What is available?
Unfortunately, most grants are for nonprofit organizations, not small businesses. BE VERY CAREFUL of advertisements promoting “free money for your business.” These ads can be very misleading, often suggesting that you can receive a list of many grant sources for a fee of a few hundred dollars.
Frequently this is a list of microloan programs – which you must repay – or grants for
nonprofit agencies.
The federal government does offer a few very competitive and targeted grants to companies developing various targeted technologies (often high technology).
This article by SCORE helps you determine if a government grant offer Is a scam or legitimate.
Types of Loans and Grants Available
The New Bedford Economic Development Council and 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 for those with a banking history and the NBEDC can be more flexible with start-up ventures. The NBEDC and banks like to see:
- Good credit
- A solid business plan
- Ability to repay the loan
- Collateral
Line of Credit is an arrangement in which a bank extends a specified amount of credit to a specified borrower for a specified time period. A line of credit is best suited to help cover expenses that tend to fluctuate throughout the course of a year.
Home equity loans are a cost-effective alternative to other types of loans because they offer good interest rates available. But you may not want to risk your family home to launch your business venture.
Equipment lease financing gives you access to many types of equipment — computers, copiers, fax machines, cars and trucks — without tying up your cash or credit lines. Although it doesn’t bring in cash, leasing reduces the amount of cash you otherwise have to raise to start.
Cash advances from credit cards are an easy and quick way to gain access to cash. But as a long-term financing method, they can be expensive — credit card interest rates typically run much more than you would likely pay on a bank loan.
Factoring allows a company to “sell” its accounts receivables to an outside company at a discounted rate. This allows the company to receive funds immediately to fund operations and ease cash flow. Factoring is done by private companies.
NBEDC Lending & Grant Program
The NBEDC has a portfolio of new grant and lending products to assist your business needs. Grant programs are available and tailored to new start-ups and existing businesses alike. And our lending office manages Revolving Loan Funds including an EDA Funded RLF, a Brownfield RLF, and multiple privately funded revolving loan funds. Additionally, as an intermediary for the U.S. Small Business Administration, we are an SBA Micro-Loan lender.
Our Senior Loan officer can tell you which loans would be best for you and can guide you through the application process. Learn more here.
SBA/Bank Loans
Once you’ve determined that an SBA or traditional bank loan is the right kind of financing for your business, you’ll need to package your financial information in a way that makes it easy for a banker to make a favorable decision. At the most basic level, you will need to provide:
- Basic information about your business
- Basic information about the loan you are requesting
- Financial information about your business
We highly recommend that you work with one of our network Resource Partners who are skilled in helping business owners prepare themselves to approach funding sources. Simply search for financing assistance in the Resource Navigator to find the right organization near you.
The SBA provides a summary of their loan products.
Statewide Loan & Grant Funds
- MassDevelopment, the state’s finance and development agency, works with businesses, nonprofits, banks, and communities to stimulate economic growth.
- Massachusetts Growth Capital Corporation (MGCC) functions as a one-stop resource for debt financing for small businesses.
- South Eastern Economic Development (SEED) is a lender and business assistance provider to all entrepreneurs with their start-up, small and micro businesses in the region.
Technology Grants
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.
The Massachusetts Small Business Development Center can be helpful in getting started with these grant programs
Angel and VC Investment Groups
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.
Before you approach an angel investor, angel network, or VC firm, ask yourself and your partners these questions:
- Am I willing to give up some amount of ownership and control of my company?
- Can I demonstrate that my company is likely to realize significant revenues and earnings in the next 3-7 years?
- Can I demonstrate that my company will produce a significant return for investors?
- Am I willing to take the advice from investors and accept board of director decisions I may not always agree with?
- Do I have an exit plan for the company that may mean I’m not involved in 3-7 years?
You’ll need to follow those answers with a solid business plan and an executive summary that includes:
- Financial overview for at least three years out
- Sales and marketing plans
- Three-to-five year goals and your action steps to get there
- Exit strategy
Who can help?
Friends and Family Funding
You, your family and friends can be the stars of this stage.
Think personal savings, a home equity loan, borrowing against your insurance policy as a start, but there are risks. The following articles give some timely tips on using personal resources to fund your business, but a strong business plan is always the first step. Seeking out a loan after you have exhausted your personal savings and equity is always much more difficult.