Funding Your Business
All businesses require some form of financing. MOSourceLink lists four fundamentals of financing.
1. Estimate the amount of funding you need
To secure financing for your business, start at the beginning: how much money do you need and for what?
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SBA (Small Business Association) Calculate Your Startup Costs
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SCORE (Service Corps of Retired Executives) - Provides free mentors that can help determine startup or expansion financing needs.
2. Determine the best source of funding
Funding for startup and growing businesses often depends on your stage of business and the amount of money you need.
Is your business a minority-owned, woman-owned, or vet-owned business? If so, there may be specific funding options for you. The Multicultural Business Association (formerly Minorities in Business), International Institute of Southwest Missouri, the SBA (Small Business Administration), or Vet Biz will be able to help you.
Microloans
Microloans are a non-traditional loan option for small businesses that cannot access bank loans. Microloans are typically much smaller than bank loans and are generally made to small business owners with fewer than 5-10 employees. Nonprofit microfinance organizations like Accion, Kiva, Grameen America, and Women’s World Banking work worldwide to provide opportunities to small entrepreneurs who cannot access bank loans.
Check out these Missouri state and local resources to apply for a microloan:
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SBA (Small Business Association) - Provides various funding options and should be considered as a top choice to reach out to.
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Alt Cap - They are a critical source of alternative debt financing for communities and entrepreneurs that fall outside the financial mainstream.
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FORGE - Prefers small and/or underserved communities, sustainable agriculture and forestry, and local small businesses that create jobs.
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Justine Petersen - Provides comprehensive credit score counseling and access to credit-building loan products and secured credit cards as part of the loan application process
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International Institute of Southwest Missouri - For minority-owned or woman-owned businesses
Repairing Your Credit
The SBA states that most outside lenders will look for a credit score of around 700. If your credit rating needs help, check out these resources:
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Justine Petersen - Provides comprehensive credit score counseling and access to credit-building loan products and secured credit cards as part of the loan application process
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International Institute of Southwest Missouri - For minority-owned or woman-owned businesses
No Free Money
There is no free money to start a for-profit business. Most grants are for nonprofit organizations, not small businesses. In MOSourceLink’s The Truth About Free Government Grants article, they remind us to “BE VERY CAREFUL of advertisements promoting “free money for your business.” Often this is a list of microloan programs that must be repaid.
3. Put together a business plan
Most outside financing sources will require a business plan that outlines how and when the funder will be repaid. A business plan serves as a road map to the future of your small business. A good business plan will help you secure financing and credit for your business, provide a guide for managing operations, finances, promotion, and marketing, and clarify goals and objectives.
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MOSourceLink’s Plan Your Business section helps with business planning, including cash flow projections.
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SBA provides guidance on the elements of a business plan, sample business plans, and how to get the most out of your business plan.
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Small Business Development Center (SBDC) offers free help crafting a successful business plan.
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Bplans is a gallery of more than 500 business plans for specific areas.
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Business Plans Handbook: A Compilation of Actual Business Plans Developed by Small Businesses Throughout North America* is available electronically through Gale Ebooks* at any Springfield-Greene County Library branch or from outside the Library with a valid library card. Also available in print at the Library Center.
4. Get information about various types of funding
You know how much money you need and the most likely funding source. Now get more information about the types of funding sources.
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MOSourceLink Network Navigators - This free service provides experts to help you determine what loan is right for you and your business.
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Friends and Family- The MAJOR source of equity for a new business comes from friends and family. This article discusses how to approach them.
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Missouri Business Incentives - Missouri offers several incentives to help your business grow.
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Missouri Department of Economic Development - Facilitates a variety of programs designed to promote business development, including many that help with financing.
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Springfield Finance and Development Corporation - Provides loans to small business projects located in central Springfield which result in job creation or retention and which could not be financed through conventional means.
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Business Development Loan Program - This program in the city of Springfield is designed to provide financial assistance for small business concerns and nonprofit organizations to expand employment opportunities, stimulate private investment, and eliminate slum and blight conditions in selected areas of the community.
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Grants and Loans for Agriculture - There are specific grants and loans if your business works with livestock, commercial horticulture, and crops, or food processing and forestry products.
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Angel Investing - Money is invested in exchange for ownership in the company. This is not a common source of funding for businesses.
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Venture Capital and Equity Funds - Venture capital firms tend to be specialized in specific industries and tend to only invest in those industries. They expect high growth rates for several years, take partial ownership in the business, and therefore expect to have a say in how the business is operated. The article lists the firms in Missouri.
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Contracting with the federal government - New businesses can also contract with the federal government. There are numerous opportunities available through SBIR (Small Business Innovation Research). Minority-owned or woman-owned businesses should get certified as a disadvantaged business to contract with the federal government. The Multicultural Business Association has a video that reviews the certification process. The SBA can also help businesses get certified and procure contracts.
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