Financing Your Business
Free Money Warning
Grants!!!! Everyone wants to know where they can get “free” money to start or expand a business. Despite ads indicating there are “giveaways” from the government, the possibility of getting “free” money to start or expand your business is slim. Beware of offers to the contrary.
Ways to Finance
Possible ways to finance your business start-up include:
Bootstrapping is a common way to finance a business. Bootstrapping is when a small business person finances his business with savings, credit cards, home equity loans, or money borrowed from friends and family.
Financial Institutions, like local banks and credit unions, can work with you to secure a commercial loan, however, they will want to see evidence of the 7 c’s of credit:
- Cash Flow
- Credit Score
Before approaching the bank, you will want to have a solid business plan. View the financial institutions located in King George County.
Small Business Administration (SBA)
Small Business Administration (SBA) provides loan guarantees to banks to encourage funding of small businesses. The SBA is not a lending institution like a bank or credit union and therefore does not issue loans. Instead, it provides support to your loan request from a bank in the form of loan guarantees. A loan guarantee is a promise by one party (the guarantor or, in this case the SBA) to assume the debt obligation of a borrower (the small business owner) if that borrower defaults on the loan. For more information on SBA-backed loans, please contact your local financial institution.
SBA 504 Loan Program
REDCO is a licensed non-profit, Certified Development Company that offers long-term fixed rate financing for small business in Virginia through the SBA 504 Loan Program.
The SBA 504 Loan Program is a long-term financing tool for economic development within a community. The 504 Loan Program provides growing businesses with a long-term fixed-rate financing for major fixed assets, such as land and buildings to include expansion, renovation, and construction projects. This loan program does not provide working capital for business start assistance. Contact information is:
1125 Jefferson Davis Highway
Fredericksburg, VA 22401
Virginia Small Business Financing Authority (VSBFA)
Virginia Small Business Financing Authority (VSBFA) is the Commonwealth of Virginia’s economic development and small business financing arm. It helps Virginia’s existing businesses and those businesses that are seeking to come to Virginia through its extensive portfolio of financing programs. For more information and contact information, visit the Virginia.Gov website.
Micro-Loans are small loans between $500 and up to $50,000 that are targeted to those businesses and business owners that have faced barriers to starting and growing a business.
Rappahannock Goodwill Industries, in collaboration with ECDC Enterprise Group of Arlington, Virginia, provides micro finance loans to help people with disabilities and other barriers to employment, to include low income individuals, start their own businesses. For more information on these loans and how to qualify, please contact Rappahannock Goodwill Industries at 800-789-2816 or visit their website.
Virginia Small Business Micro-Loan Program
In another effort to assist Virginia’s businesses in these challenging times, the VSBFA is rolling out a new pilot program known as the Virginia Small Business Micro-Loan Program. Through this program, the VSBFA will lend directly to the qualifying business up to $10,000 for a one-year term. If the business has received technical assistance from one of Virginia’s Small Business Development Centers (SBDCs), and the SBDC so certifies, the business may apply for up to $25,000. For more information, visit the Virginia.Gov website.
Venture Capitalists are typically wealthy, private investors willing to fund new business ventures. Some function individually, but most work through a formal network of investors. Venture capitalists are looking to invest in businesses with the potential for significant profits, usually high-tech or innovation companies. Possible venture capital groups in Virginia can be found at their website.