From investor capital to start-up micro-loan programs, there are a variety of financing opportunities available to Sonoma County entrepreneurs and business owners.
You may be looking for an investor if you are a fast-growing tech business. Mom and Pop retail shop? You may be looking for a start-up micro-loan to get going!
🏦 Banks and Credit Unions
Banks and credit unions offer special accounts and credit cards for business owners. This allows business owners to separate their business and personal accounts for easier money management.
Business accounts allow owners to collect receipts, write checks, and accept credit card transactions. Business accounts are required for incorporated businesses, where the business is considered a separate legal entity from the owner(s). All this helps to simplify the tax filing process, while also protecting the privacy of business owners.
Funding a start-up business can be a challenge. Most commercial banks and credit unions require a business to be open for two or more years to obtain business loans.
🏦 Small Business Administration (SBA) Loans
SBA loans are federally guaranteed and geared towards small businesses and entrepreneurs. Typically, lenders require a completed business plan with financial projections, 20-30% equity or collateral, and evidence of the applicant’s ability to repay the loan.
💵 Alternative Lending
Alternative lending resources can help businesses that encounter difficulty gaining financing through traditional means. This may include microloans, crowdfunding, or private direct lending. These lenders can finance start-ups and existing businesses, and some offer pre- and post-loan business counseling. Each lender is different, and some serve a specific business community.
💸 Angel Investors and Venture Capitalists
Angel Investors are individuals who invest their own money into a business, usually in exchange for future shares or partial ownership. Venture Capitalists are (usually) business professionals who invest other people's money into businesses in exchange for a share of the business's profits. Both are great alternative funding options.
💸 Crowdfunding
According to Investopedia, "crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture." Many websites promote crowdfunding efforts, such as GoFundMe and Kickstarter. These websites usually take a percentage of the revenue generated from the fundraising efforts.
💰 Green Financing
Green Financing is any type of loan, grant, or investment that promotes any type of sustainable development. This includes renewable energy upgrades, the purchase of eco-friendly materials, or waste management improvements.
💸 Grants
Many federal, state, and local government agencies offer grant programs for new and existing small businesses. There are also grants available through nonprofits, community organizations, and private donors. Grants, unlike loans, do not have to be repaid. Searching and applying for grants requires a lot of time and resources. Please contact the EDC for the most up-to-date information on local grants or application assistance.
🏦 Tax-Exempt Bond Financing
Tax-exempt bonds generally offer lower interest rates and longer contract lengths to non-profits and certain local businesses. Tax-exempt refers to the fact that the bondholder does not have to pay federal, and sometimes state and local income taxes on the interest portion of their bond debt service payments, making the interest rate lower than for a taxable bond. Tax-exempt bonds also typically have fixed interest rates.
Check out the EDC's website for a complete list of local financial institutions and up-to-date information on the EDC's financing options!