Adequate financing is crucial to the success of any business in both the start-up phase and in later stages of development. The following section lists types of financing, ranging from the most common and informal sources to the most formal and complex sources, which tend to be used only rarely by firms.
Personal Sources — Personal assets and investments by family and friends provide a major share of financing–an average of one-third of all funds–for business start-ups. Personal sources of funds may include savings, sales of assets, personal loans, second mortgages, and credit card borrowings, to name a few.
Seller Financing — A common way of obtaining financing when purchasing an existing business is to ask the seller to finance all or part of the purchase price. The interest rate paid may be lower than other types of financing. It is usually well worth your while to pursue this option if it is available.
Commercial Banks, Credit Unions, and Finance Companies —
Although informal sources account for a good share of business start-up financing, formal business loans also play a part. Banks are the primary providers of these formal loans for business starts. Finance companies and Credit Unions provide much of the rest. These institutions will require collateral, personal and otherwise. Before you meet with a lender, verify what documents they require.
The Wisconsin Housing and Economic Development Authority (WHEDA) provides funding programs for small expanding or start up businesses. Call: 1-800-444-6873 or visit the website link highlighted above.
The Linked Deposit Loan (LiDL) provides an interest rate subsidy on lender financing to women or minorities who start-up or expand a business.
The Agribusiness Guarantee provides loan guarantees for projects developing products, markets, and methods of processing or marketing for a Wisconsin-grown commodity. The loans can be used for equipment, land, buildings, working capital, inventory, and marketing expenses.
WBD is a business finance resource that provides the knowledge, services and access to capital needed to create jobs, grow businesses and build communities. Helping borrowers get the financing they need at the lowest possible rates with a variety of products and services to make it happen. Contact WBD Loan Officer, Matt Wilcox, at (920) 966-1490 or visit the above link for more information.
The Wisconsin Women’s Business Initiative Corporation (WWBIC) offers micro loans to businesses owned by women, minorities, and low-income individuals. WWBIC also offers training and technical assistance. For information, contact WWBIC at 1-414-263-5450 or visit the website link highlighted above.
The U.S. Small Businesss Administration provides loan guarantees that are used in conjunction with bank financing to improve loan terms.
The Calumet County Revolving Loan Fund, is available to all businesses located in Calumet County. For more information, call Kelly Hoxtell at (920) 849-1493, ext. 790 or visit the website link highlighted above.
Department of Commerce Programs:
Through the Business Development Initiative (BDI), entrepreneurs with disabilities, organizations, and businesses interested in hiring persons with disabilities can receive grants and technical assistance. Call 1-414-220-5360.
The BDI Micro Loan Program helps entrepreneurs with permanent disabilities and rehabilitation agencies finance business start-ups or expansions. Call: 1-414-220-5360.
The BDI Self-employment Program helps severely disabled Division of Vocational Rehabilitation (DVR) clients start micro-businesses. Call: 1-414-220-5360.
The Commerce/DVR Job Creation Program is designed to increase employment opportunities for DVR clients by providing equipment grants, technical assistance grants, and customized assistance to companies that will hire persons with disabilities as part of a business expansion. Call: 1-414-220-5360.
The Minority Business Development Fund offers low-interest loans for start-up, expansion or acquisition projects. To qualify for the fund, a business must be 51 percent controlled, owned, and actively managed by minority-group members, and the project must remain or increase employment. Call: 1-608-297-9550.
The Minority Business Early Planning Grant Program provides seed capital to minority entrepreneurs for feasibility studies, business plans, and marketing plans. Call: 1-608-297-9550.
The Development Zone Program is a tax-benefit initiative designed to encourage private investment and job creation in economically-distressed areas. The project offers tax credits for such activities as hiring disadvantaged workers and undertaking environmental remediation. Call: 1-608-267-2045.
Micro Loan Programs:
Loans to entrepreneurs interested in starting or expanding a business. The following are the approved SBA Micro Loan sources.
These funds provide assistance to the veteran in the purchase of, or an investment in a business that will provide the necessary income to purchase supplies, fixtures, or equipment; or for operating capital. For further information:
Department of Veterans Affairs
1-608-266-1311 or visit the website link highlighted above.
Venture capital firms are interested in investing in businesses with especially high-growth potential. Venture capital firms expect to recover three to five times their investment in five to seven years. They are typically interested in projects requiring an investment of $250,000 to $1,500,000. For more information on venture capital, call the Department of Commerce at 1-800-TECH-LINE.
The average firm selling stock for the first time is a growing company with sales of approximately $20 million. The costs involved in selling stock are substantial–upwards of $500,000. Stock issues require extensive assistance from attorneys, accountants, and investment bankers. If you have a specific question on a particular aspect of securities law, contact: