Access to capital is often a small business owner’s largest hurdle. Thankfully, there are a variety of financing options for small businesses when conventional lending sources are not available. These options range from loans as small as $500 for a start-up business to multi-million dollar investments in established and profitable operations.
US Small Business Administration (SBA): The SBA does not lend money directly but instead works with banks and community non-profit lenders to provide funding for start-up and growing small businesses. The top three SBA financing vehicles are:
Gives 7(a) loans to eligible borrowers for starting, acquiring and expanding a small business. This type of loan is the most basic and the most used within SBA's business loan programs. Borrowers must apply through a participating lender institution.
Provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.
Offers very small loans to start-up, newly established or growing small business concerns. SBA makes funds available to nonprofit community based lenders (see UCEDC) which, in turn, make loans to eligible borrowers in amounts up to a maximum of $50,000. Applications are submitted to the local intermediary and all credit decisions are made on the local level.
New Jersey Economic Development Authority (EDA): The EDA has a variety of financing vehicles for small businesses (5-100 employees, in business 1 – 5 years), including low-interest financing through bonds, loan participations, loan guarantees and direct loans with your choice of variable or fixed interest rates. Learn about why your business need financing and what the EDA can offer.
UCEDC: This Union-based non-profit economic development corporation provides funding for small businesses that cannot qualify for commercial or EDA loans, such as start-up operations or businesses with relatively small financing needs. In addition to UCEDC’s financial support, small business borrowers will receive free business mentoring services throughout the life of the loan.
· Microloans: UCEDC’s Microloan Program provides both start-up and existing businesses with an opportunity to borrow money for a variety of reasons, including purchasing equipment, fixtures or inventory; working capital; or making renovations on privately owned commercial real estate. Start-ups (operational for less than two years) can borrow a maximum of $35,000, while older businesses with a profitable operating history are eligible for up to $50,000.
· SBA 7(a) Community Advantage Loans: UCEDC is one of only 30 lenders in the nation to offer the SBA (7a) financing program, designed to encourage business growth in under-served communities. Long-term loans of up to $250,000 are available to start-up (in operation less than two years) and existing businesses.
· Business Growth Fund: UCEDC’s Business Growth Fund supports growing businesses in need of a mid-sized loan or gap financing as part of a larger loan package with other lenders. Established businesses (36 months+) with a profitable operating history may borrow $20,000 to $150,000.
· Child Care Loans: UCEDC’s ‘First Steps’ child care loan program provides short term loans to both home and center-based child care operations, including centers operated by non-profit organizations. Funding is available for both start-up and existing centers. Loans range from $500 to $150,000, depending on operational history.
· Line of Credit: Exclusive to Union County businesses, UCEDC offers credit lines ranging from $5,000 to $15,000 for both start-up and existing operations.