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Financing Your Business
One major cause of business failure is lack of sufficient funds. It's also the reason some businesses never start. The following is an explanation of some of the types of funding available, as well as local sources of assistance.
- Personal funds: can include monies from savings, home equity loans, loans from family or friends, cash advances on credit cards, etc.
- Debt financing: typically bank/lender loans with repayment to include interest on borrowed funds. May also include loans from your credit union.
- Equity financing: has no direct obligation to repay funds borrowed, but does involve selling or granting a share of the business (equity) to the lender. Venture capital is a type of equity financing.
What lenders want to know:
- Are you qualified to manage this business?
- Do you fully understand your product/service and market audience?
- What do you plan to do with the borrowed funds?
- Will your business generate the revenues needed to make prompt repayment?
- Do you have sufficient collateral, business or personal?
- Do you have a solid history of prompt payments on business and/or personal obligations?
Local Funding Sources to Contact:
Small business officers at area banks and lending institutions
Click here for a list of Chamber-member banks and financial institutions, or click here and type "banks" in the business directory search box.
Metropolitan Development and Housing Agency (MDHA)
701 South Sixth Street
Nashville, TN 37206
615-252-8590
Offers small business loans to assist qualified start-up or existing businesses located in economically deprived areas of Nashville. Loans of up to $20,000 can be used to purchase equipment, purchase a building, or make improvements to a building. Market interest rate applies, usuallly 1 percent over prime.
MDHA Urban Development Action Grant
615-252-8400
Mid-Cumberland Area Development Corporation
501 Union Street, Sixth Floor
Nashville, TN 37219-1705
615-862-8831
www.gnrc.org
Assists small businesses in applying for SBA 504 loans and various other government loan programs. SBA 504 loans are available to qualified businesses for fixed asset additions and land and building acquisition, which will stimulate job creation. These loans are funded through the SBA and private lenders and usually require personal guarantees by the business owners.
Nashville Capital Network
211 Commerce Street, Suite 100
Nashville, TN 37201
615-322-3154
615-256-0393 (fax)
The Nashville Capital Network (NCN) is a collaborative initiative of Vanderbilt University, the Nashville Technology Council, Nashville Health Care Council, Nashville Area Chamber of Commerce, local investors and local business and professional leaders. The NCN strives to promote entrepreneurial education and economic growth by becoming the hub for early-stage capital formation in Middle Tennessee.
Nashville Minority Business Center
615-255-0432
The Nashville Minority Business Center's One Loan Fund serves as an alternative and supplemental funding source for small and disadvantaged businesses. This fund serves business owners typically unable to borrow from traditional lending sources. While 20 percent of funds will go to start-ups, the primary focus is to provide funds and technical assistance to existing businesses located in low-income communities.
The center also markets the Department of Economic and Community Development's Telecommunications Assistance Program for Small and/or Minority-owned Businesses (TAP). The TAP program provides guarantees up to $400,000 for businesses in the telecommunications industry.
Tennessee Valley Authority (TVA)
www.tva.gov/econdev/obr/index.htm
The Valley Coalition is a public-private lending partnership between financial institutions and TVA that works to promote the growth and establishment of minority and economically disadvantaged businesses. For more information, call 615-232-6053.
TVA supports small, disadvantaged, minority- and woman-owned businesses through outreach activities, online tools, and business, technical and financial assistance.
Woodbine Community Organization
Small Business Program
222 Oriel Avenue
Nashville, TN 37210
615-850-3451
World Relief Economic Advancement Program
442 Metroplex Drive
Building D, Suite 100
Nashville, TN 37211
615-833-7735
www.wr.org
Offers loans up to $25,000 to existing or start-up businesses owned by refugee entrepreneurs. Applicants must complete a loan application and submit a business plan. Applications are then submitted to a loan committee for review. Loans can be applied for at any time and usually take two to six weeks for processing.
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