The typical advice article about financing your business is usually about loans or other types of lenders or equity investors. Loans, angel capital and alternative financing such as accounts receivables factoring are key ways that we small businesses fund hiring, growth and operations. But there are other ways to fund your business – ways that often are overlooked. Some of these are especially good for relatively new and startup businesses, or home-based businesses. But they can be the start of some substantial and successful businesses. Other solutions are applicable to established small businesses as well as new businesses:
1. Contests and awards – One of the most intriguing ways to get money in your business is through contests, competitions and awards. We’re all familiar with startup business plan competitions. There are many of those. Often, however, they target students who are aspiring startup founders. Sometimes, they can give a substantial business a start. For instance, Embrace Pet Insurance was founded by two entrepreneurs who won the Wharton Business School Business Plan Competition in 2003, as they note in their company history.
But there’s a lot more out there besides business plan competitions. Large companies regularly offer contests with prizes that can be in the mid-five figures – or even higher. Intuit, for instance, has granted or pledged $1.5 Million in awards as part of its Love a Local Business campaign. Many large corporations that market products to small businesses offer awards and contests. So pay attention to all those entrepreneur and small business competitions and contests – they can be a bigger financial deal than you realize.
2. Local grants – “Government grants” has, unfortunately, become a spammer term on the Internet. There are any number of places online that promise to hook you up with sources of government grants – for a fee. My advice is to stay away from any site that wants you to pay to get information about grants. It’s almost always publicly available information. Do the searching yourself.
So where do you search for grants?
There are precious few grants at the Federal level directly for small businesses. SBIR grants for technology companies are one notable exception.
Typically there will be more grant programs for small businesses at the local level – and that’s where you should look. Local governments, economic development organizations, private corporations and foundations in your area all may be sources of local grants or low-cost low programs. Start with the websites for state government, city government and local economic development organizations – or give them a call. Also, check with your local SCORE mentors. Local SCORE offices will be familiar with such programs in your area and the types of businesses those programs are suitable for.
When you search or ask, don’t limit your search just to the word “grant.” Often these programs are hybrids. They may provide a combination of low-interest loans, technical assistance, tax rebates or outright grants.
Sometimes you must meet very specific criteria to be eligible. For example, the City of Cleveland has a section of its website dedicated to Loans and Grants for business – such as the Storefront Renovation Program that offers assistance to retail property owners in certain designated zones of the city.
3. Assistance Programs and Incubators – Aside from programs that offer monetary grants and support, there are also sources available that provide in-kind support. The best known of these are incubator programs. An incubator may provide office space, telecommunications and Internet connections, administrative services, mentoring, and sometimes factory facilities, and product development and business development assistance. The National Business Incubation Association website has a directory of business incubators. Your local SCORE mentors will also be familiar with incubators in your local community, if any exist.
In addition to incubators, there are several national level programs available online that provide free in-kind resources to startups and small businesses. The Microsoft BizSpark program offers tech startups access to software, development tools and production licenses of server products, along with business development and technical training, access to a partner network, as well as visibility resources. Startup America also has a program offering free products and other resources to small businesses and entrepreneurs.
So – be creative! While these are unorthodox places to consider for financial assistance in your business, they can translate into substantial monetary benefit. You don’t always have to think “loan” or “equity investments” when you think of financing your business.