Financing Your Business
Business Financing Options
Banks and government loan guarantee programs (SBA, USDA, NHBFA)
Belknap EDC’s Revolving Loan Fund
Vested for Growth
Borealis Ventures’ Granite Fund
A. Commercial Financing
Understand the “Risk/Reward Spectrum” and where your project fits in. As one moves up and to the right (as shown here), the financing becomes more costly to the business owner. Belknap EDC can help you determine which type is the best fit for your project.
B. Crowdfunding Platforms
These alternatives can be a good fit for projects that are not eligible for commercial financing programs:
Kiva Zip – 0% loans of up to $5,000 comprised of $25 donations from people all over the world.
Kickstarter, IndieGoGo, and others focus on funding for projects in exchange for unique perks for donors.
“Working with BEDC, has been a pleasure, we have found the perfect solution for our expansion… and enjoyed two project collaborations with BEDC, in particular, its’ business revolving loan programs.”
Bob Manley, Owner/Partner at Hermit Woods
Most banks provide loans and lines of credit to businesses that have successfully entered the market with their product or service, and are already profitable or approaching profitability. If you are an established business with cash flow, the best place for you to start your search for financing is with one of these banks. Conventional financing is the lowest cost option.
Any of these banks can take advantage of state and federal loan guarantee programs designed to reduce the bank’s risk. The US Small Business Administration (SBA), US Department of Agriculture (USDA), and the NH Business Finance Authority all offer guarantee programs designed to extend the reach of commercial banks. Ask your loan officer if your project might benefit from any of these programs before you begin your loan application.
Belknap EDC’s revolving loan fund has provided gap financing to over 85 local businesses since 1992. While our loans typically supplement conventional financing from a private bank (which is why we are categorized as “subordinate debt”), we have provided primary financing for several local businesses as well. Belknap EDC has loan products to meet the needs of any size business. Whether you are a sole proprietor just starting out, an established small business seeking to grow, or a large company putting together a complex financing package, please contact our Executive Director, Justin Slattery at email@example.com or (603) 524-3057 to discuss your project.
Belknap EDC is an equal opportunity lender and adheres to the US Department of Agriculture's non-discrimination statement.
Entrepreneurs typically rely on their own financial resources and that of family and friends for most of the start-up phases of their business (proof of concept, prototyping, product development, and commercialization). Sometimes angel investors provide capital for the product development and commercialization stages, after the entrepreneur has demonstrated that there is strong growth potential. This funding usually takes the form of equity financing, whereby the investors receive an ownership stake in the business which affords them the right to be involved in management decisions. Equity financing deals are most appropriate for businesses that will grow rapidly—most companies that are funded this way are sold, either through an initial public offering (IPO) or to a larger company, within a few years.
In some urban areas, there may be several active “angel networks” or venture capital firms that pro-actively seek out these types of investment opportunities. The only investment group of this kind available to Lakes Region entrepreneurs is the statewide Granite Fund recently created by Borealis Ventures in partnership with the NH Business Finance Authority.
If a business gets turned down for a conventional loan and/or subordinate debt but does not want an outside equity investor, there is now an alternative. Don’t shelve that growth plan before considering royalty financing. The way royalty financing works is that the investor gets paid a percentage of future gross revenue for a negotiated period of time. Unlike the equity investor, they become an adviser but do not make any business decisions and do not try to position the company for sale. Royalty financing is an alternative to equity financing for high margin businesses (better than 25% gross profit margin) with a strong growth proposition. Lakes Region companies interested in exploring royalty financing should contact Vested for Growth, a royalty investment product offered by the NH Community Loan Fund.