Show Me the Money! Thoughts on Two Major Alternative Funding Websites
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Often times, in today's economy, securing an actual bank loan for your small business can be an excruciatingly difficult experience. From the second you walk into your neighborhood Suntrust and try to get an appointment with Brent- the blonde, smiley young loan officer- to the minute you see your spouse frowning at you in disapproval as your only vehicle is inspected by Brent, as you are forced to put up your beloved 2011 Impala as collateral just so you can inch your potential dream a little closer to it's realization- you realized that these "small business loans," if they even happen at all, can be a complete headache, AND a complete heartache.
However, all faith is financial humanity is not yet lost! Many entrepreneurs are turning to more unconventional, newer sources for funding, with some of the most popular, legitimate sources being available right here on the World Wide Web. Let's take a look at two different websites for some alternative funding opportunities and ideas....
STATED MISSION: "Founded in 1991, Association for Enterprise Opportunity (AEO) is the only national membership association committed to microenterprise development as an effective economic development strategy and a powerful poverty alleviation tool. AEO provides its members with a forum, information, and a voice to promote enterprise opportunity for people and communities with limited resources. AEO currently has a membership that stretches across the 50 states, the District of Columbia, and Puerto Rico and includes all key agencies and organizations that provide microenterprise services to disadvantaged microentrepreneurs. The combined reach of these organizations exceeds 300,000 microentrepreneurs and small business owners annually."
SO, WHAT DOES ALL THAT MEAN? Well, it means that the goal or this network is to connect these "MICRO-BUSINESSES" (businesses with five or less employees) to an "MDO" or Micro-business Developing Organization.
TYPES OF FINANCING OPPORTUNITIES: 1.) Training of members on issues and advocacy techniques 2.) Travel, lodging, and meal expenses that may be required for the training, in Washington 3.) Consultant fees 4.) CASH GRANTS are used to fund the Micro-enterprise Developing Organizations, but not always the small businesses.
REQUIREMENTS AND QUALIFICATIONS: 1.) Have a small business with less than five employees dedicated to growing your community and creating jobs 2.) Use their website to link up with an in-network MDO 3.) The MDO will tell you more about funding/options.
So, HOW DO THEY ACCOMPLISH THEIR MISSION? The organization uses three main "initiatives," as outlines below, in addition to working on Capitol Hill to advocate policy, as well as data and research. These three main initiatives are:
1.) Catalyst Initiative- Identifying, supporting and piloting opportunities to increase the capacity of micro-enterprise development organizations to accelerate and expand the impact of micro-enterprise in the US.
2.) Capacity Building in the SouthEast- Increasing the efficiency and effectiveness of advocacy and operations at the state and national levels.
STATED MISSION: Invest capital in institutions that increase access to responsible financial services in underserved communities. Bring capital, knowledge, and opportunities to the industry. Generate reasonable financial, social, and environmental returns.
SO, WHAT DOES THAT MEAN? NCIF gives money mostly to small and minority-owned banks that are planning to increase access and responsible financial products in underserved communities.
TYPES OF FINANCING OPPORTUNITIES: Capital investments.
REQUIREMENTS AND QUALIFICATIONS: The banks must have 1.) Effective leaderships and be organized 2.) Show commitment to providing responsible products and services in underserved communities 3.) Create an expectation of strong financial and social returns for all stakeholders and investors 5.) Create an expectation of providing liquidity to equity investors within a reasonable period of time and 6.) Be aligned with NCIF's mission and willing to work as a mutually reinforcing partner
SO, HOW DO THEY ACCOMPLISH THEIR MISSION? NCIF accomplishes their mission via equity capital, new market tax credits, a small business loan fund, a bond guarantee program, and deposits.
IN CONCLUSION: If your small business is indeed a small bank, this is an excellent possible source of funding.
OTHER INFO: On this website, visitors can search for "Mission-Oriented" banks in their own area, as well as track peer group data and view trends in key financial and social indicators by getting TONS of information about the CDFI Banking Industry in general.
Overall, there are always pros and cons involved when attempting to utilize alternative funding sources and doing things the more traditional way with lending. Be wary of any funding or lending that involves high interest rates, or would be far too difficult to pay back. Bank loans may have a more difficult set of requirements, yet alternative lending often has a much high interest rate. Sometimes, other sources may seem attractive, since they offer "no monthly payments" for a large lump sum of cash, and instead prefer "a fixed daily percentage of daily sales," which in the long run, can be a huge chunk of your revenue.
Knowing and understanding your options and sources for financing are key! Continue to grow and expand your knowledge of finance so that you will not be caught off guard, and your business venture will be sure to expand and evolve along with your mind.
3.) Green Economy- Fostering a network to support members as they capitalize on the "green" opportunity; identifying new "green" opportunities with and for our members and partners.
IN CONCLUSION: If your small business is indeed a micro-business, and you're serving an underprivileged area, it may not hurt to network with AEO and see what their MDO network can suggest in terms of funding, training, and outreach.
OTHER INFO: On this website, visitors may get information on relevant policy issues such as the Affordable Health Care Act, they may view the organization's financial info and tax records fairly openly, and even see a public list of funders.
OTHER INFO: On this website, visitors may get information on relevant policy issues such as the Affordable Health Care Act, they may view the organization's financial info and tax records fairly openly, and even see a public list of funders.
STATED MISSION: Invest capital in institutions that increase access to responsible financial services in underserved communities. Bring capital, knowledge, and opportunities to the industry. Generate reasonable financial, social, and environmental returns.
SO, WHAT DOES THAT MEAN? NCIF gives money mostly to small and minority-owned banks that are planning to increase access and responsible financial products in underserved communities.
TYPES OF FINANCING OPPORTUNITIES: Capital investments.
REQUIREMENTS AND QUALIFICATIONS: The banks must have 1.) Effective leaderships and be organized 2.) Show commitment to providing responsible products and services in underserved communities 3.) Create an expectation of strong financial and social returns for all stakeholders and investors 5.) Create an expectation of providing liquidity to equity investors within a reasonable period of time and 6.) Be aligned with NCIF's mission and willing to work as a mutually reinforcing partner
SO, HOW DO THEY ACCOMPLISH THEIR MISSION? NCIF accomplishes their mission via equity capital, new market tax credits, a small business loan fund, a bond guarantee program, and deposits.
IN CONCLUSION: If your small business is indeed a small bank, this is an excellent possible source of funding.
OTHER INFO: On this website, visitors can search for "Mission-Oriented" banks in their own area, as well as track peer group data and view trends in key financial and social indicators by getting TONS of information about the CDFI Banking Industry in general.
Overall, there are always pros and cons involved when attempting to utilize alternative funding sources and doing things the more traditional way with lending. Be wary of any funding or lending that involves high interest rates, or would be far too difficult to pay back. Bank loans may have a more difficult set of requirements, yet alternative lending often has a much high interest rate. Sometimes, other sources may seem attractive, since they offer "no monthly payments" for a large lump sum of cash, and instead prefer "a fixed daily percentage of daily sales," which in the long run, can be a huge chunk of your revenue.
Knowing and understanding your options and sources for financing are key! Continue to grow and expand your knowledge of finance so that you will not be caught off guard, and your business venture will be sure to expand and evolve along with your mind.
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