By Teddy Nykiel
Saddled with student debt and less-than-perfect credit, Ayla Bystrom-Williams is hesitant to take on small-business loans to finance her kombucha beer company, HoneyMoon Brewery. The Santa Fe, New Mexico-based entrepreneur is relying on a less expensive but more time-consuming financing method: a small-business grant.
Were really trying to not get into any sort of debt or give away any equity at this stage of the business, Bystrom-Williams says.
Although free cash to start or grow a business sounds like the dream solution, small-business grants are difficult to obtain because there just arent many available. But if youre determined to try for a grant, there are some earmarked for women entrepreneurs.
Below, to mark Women Entrepreneurs Day, are four tips to maximize your chances of getting small-business grants for women.1. Apply widely.
Getting grants to fund your small business is a numbers game: You have to apply to many in hopes of actually getting a few. Bystrom-Williams says she has spent up to 30 hours a week researching grant opportunities and attending networking events she hopes will lead to grant money.
It was definitely like a part-time job, she says.
It took persistence before her work paid off. Bystrom-Williams got denied for a large local grant, but the sponsoring organization told her about possible funding through Los Alamos National Laboratory near Santa Fe. She got a $25,000 grant through the labs technical assistance program, which paid a lab researcher to help her develop her kombucha beer. In August, Bystrom-Williams won a $500 Amber Grant from WomensNet, an organization that awards that amount to a different business each month.2. Look locally.
Finding a small-business grant is perhaps the most challenging aspect of securing one. The federal government doesnt offer small-business grants, but state and local governments do. You can search for them using the US Small Business Administrations Loans and Grants Search Tool.
Get to know business advisors in your area who can point you in the right direction. There are hundreds of SBA-sponsored Small Business Development Centers and Score chapters around the country, both offering free business consulting. (Find your local SBDC here and your local Score chapter here.)3. Research the organizations.
Once you identify a grant youre interested in, spend time researching the organization, says Cathy Kellon, founder of Portland, Oregon-based Ivalieu, which makes modern pettipants for women to wear underneath skirts and dresses. She suggests building relationships with the people who work at the organization funding the grant.
Some foundations will not respond to general inquiries, she says. So you have to [know] someone.
Kellon, who won the $500 Amber Grant in September, also suggests looking at businesses that have won the grant in the past to learn about what types of ventures the organization is looking to fund.4. Pursue non-cash prizes.
Participate in business plan or pitch competitions that offer business services, office space and other non-cash resources as prizes.
Bystrom-Williams was a finalist in BizMIX, a business plan competition in Santa Fe. For making it to the last round, she won time with an accountant, bookkeeper and a lawyer expenses that would have come out of her budget otherwise.
Additionally, Bystrom-Williams didnt see a dime of the $25,000 from Los Alamos National Laboratory, which instead paid the researcher she worked with in the lab. But that was OK with her.
Sometimes grants that target specific aspects of your business can be way more valuable than actual capital, she says.Cant get a grant? Consider small-business loans.
If you cant get your hands on a small-business grant, you might have better luck with loans. For alternatives to grants, check out our small-business loans for women page, where you can compare seven different loan options based on your needs.
Its not free money; youll have to pay fees and interest, which can be high. Traditional bank loans are your best bet if you can qualify for them. Otherwise, online small-business loan annual percentage rates range from 7% to 113%. But there are more small-business loans available than grants, so youre more likely to succeed at getting funding.
Teddy Nykiel is a staff writer at NerdWallet, a personal finance website.
To get more information about funding options and compare them for your small business, visit NerdWallets small-business loans page.
Aditya Birla Finance, a non-banking finance company (NBFC), will foray into unsecured lending with personal loan and business loan segments from January.
We want to focus on personal loans and business loans to SMEs (small and medium sector enterprises)Granular business will be our focus. We will begin from January 1It will be part of our retail business but as a separate vertical, said Rakesh Singh, Chief Executive Officer, Aditya Birla Finance, in an interaction with BusinessLine.
Without giving any target, Singh said they have built the capabilities and hired an internal expert who was earlier in charge of collection and fraud control.
On the reason for venturing into the segment, Singh said, The performance of the unsecured lending has increased over the last five years and growing. The credit bureau data is also quite rich and the data makes it complimentary for us to tap the space.
He added that the company will target the group’s 1.30 lakh-odd employees to grow its business to begin with. Currently, the NBFC operates five business segments, including capital markets, mortgages, corporate business and structured finance.
Last year, the lender also ventured into housing loan business and within its first year of operations grew its lending book to #8377;880 crore as on September 2015. We plan to enter 30 cities by March 2016 (from 26 cities as on September) and reach 60 cities in a year’s time. Our target is self-employed individuals and our average ticket size is #8377;50-60 lakh. Affordable housing is a good opportunity but we need different capability for the same. We will look at the segment for sure, Singh added.
After raising #8377;3,000 crore via NCDs earlier this year, Aditya Birla Finance will look at raising about #8377;450 crore by March 2016.
We raise money to address our growth needs and the funds raised worth #8377;3,000 crore via NCDs earlier this year, has been deployed. We will need capital this year and we have budgeted at about #8377;450 crore by the end of March 2016. The mode of capital raising will be decided by the promoters and management soon, Singh said, adding that the company will grow in the SME, mortgage and retail businesses at present.
- Time of Publication: 12:32 pm.
Last year when Brooklyn entrepreneur Danielle Katz needed a loan to hire a teacher for the early childhood learning center she started, her options were limited. Her business was new, and it had no credit history. A community organization pointed her to a pilot program run by the peer-to-peer microlending site Kiva, where she listed her loan request. Within a month, Katz, who is 39, secured a $5,000 loan—enough to hire the teacher, and grow her school, "We were able to increase enrollment while keeping tuition affordable," she said. Best perk: no interest.
We are now talking to Lending Club, and saying send us your declines. Premal Shah, Kiva
Kiva combines the socially minded enthusiasm of a Kickstarter with the financial discipline of a Lending Club to bring affordable small business loans to entrepreneurs. It was launched a decade ago to help business people in developing countries, but after the 2008 financial crisis made it so difficult for small business owners to access capital, co-founder Premal Shah decided to pilot it in the United States. Today, after several years of testing it in multiple citiesPhiladelphia, San Francisco, and New York City among themKiva is officially rolling out its US lending platform, Kiva Zip, nationwide. Shah will join former President Bill Clinton to make the announcement at a small business event in New York City. Says Shah, "Even if you are underserved by traditional small business lenders in the US, you can likely get on the Internet and start a Kiva account."
Kiva began as an experiment by a pair of Stanford b-school students who were reviewing projects for a microlender in Uganda. They realized banks could charge microlenders rates of 12 percent or more plus hefty administration fees. These costs to the microlenders were then passed on to the loan recipients—often African first-time entrepreneurs—who had to pay as much as 35 percent in interest on the capital they borrowed. In the US, peer-to-peer bankings sites like Prosper were just launching. By cutting out the banks and setting up a platform on which individuals could invest their own money, Kiva hoped to cut the cost of loans in half for the microlenders with which it partners. Early on, those lenders were mostly Americans intrigued by the notion of "investing" $25-50 at zero interest to help the poor through the market instead of through traditional charity. (Investors do not get a tax break on their investments, since they can withdraw when the borrowers pay them back.) This allows borrowers to access capital at a much lower interest rate, and the company says that 98 percent of its borrowers repay globally.
Now, of course, the idea of crowdsourcing resources has gone mainstream. Everything from your independent film budget (Indiegogo) to your medical advice (CrowdMed) can be crowdsourced. And after years of tussling with the SEC to determine the proper regulatory structure for their businesses, peer-to-peer lending sites like Prosper and LendingClub have hit upon an acceptable, mainstream model for crowdsourcing loans. (Kiva does not have these regulatory issues because lenders do not receive a return on their money; they only receive their principal back.)Reputation Economics
For the US market, Shah has taken a slightly different approach. He points out that eight of ten small business owners are turned down for loans. His goal, he says, is to fund people who otherwise wouldn't have access to capital, either because they don't have the appropriate credit history or because they need a very small loan. (Banks often don't bother with loans less than $50,000 because they aren't worth the price of underwriting.) By traditional measures, Kiva's borrowers are not the safe bets—the borrowers Lending Club and Prosper target who have high personal credit scores. "We are now talking to Lending Club, and saying send us your declines," says Shah.
Kiva turns to social networks--the real kind, not the digital ones--to help determine the creditworthiness of its borrowers.
Kiva turns to social networks—the real kind, not the digital ones—to help determine the creditworthiness of its borrowers. Potential borrowers must recruit around 20 people to contribute small increments—$25 dollars each—before they qualify for a loan. Once they meet this commitment, they can request up to $10,000, which they must repay within either 24 or 36 months. For example, a restauranteur in Tampa, Florida has requested $5,000 to buy a chocolate fountain and a sneeze guard (critical!) and do some marketing on Facebook as he launches his Belgian chocolate and fruit bistro. A Berkeley, Calif cold brew maker has requested $10,000 to purchase a 300 gallon brew tank, among other things. And a husband-and-wife urban farming team in Minneapolis, Minnesota has requested $4,000 to buy a van and equipment to grow and transport local greens. Before any of them could make the ask, they had to convince 20 members of their local community to back their reputation and likelihood of paying.
So far, Kiva has made just 1,845 loans in the United States, lending $10 million and sourcing most of its borrowers through local community organizations helping out with the pilot program. It's enough, however, for Shah to feel the platform is ready to expand and open itself to anyone who makes a profile on Kiva or partner Paypal. He says the repayment rate nationwide hovers around 90 percent. More than half the entrepreneurs funded so far have been women; 65 percent have been ethnic minorities.
Shah's hope is that the idea of "lending local" might catch on with the same fervor as buying local and that individuals will feel motivated to make incremental grants on Kiva by the same drive that compels them to donate to charities. Judging by the names and profiles of lenders on each request, that's happening. But something else is happening as well. Having had such a great experience with her first Kiva loan, Katz has applied for a $10,000 loan this fall to hire a new teacher, fix up the backyard, and cover insurance. Her lenders also include Lorenz from Hamburg, Germany, and Valentin from Hong Kong. "It comes in from everywhere!" she says. Just like the original Kiva site.Go Back to Top. Skip To: Start of Article.