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Starting a new business is an exciting endeavor, but it requires a significant amount of time, effort, and most importantly, capital.
Many small businesses only survive less than five years because of funding woes. That can be attributed to the fact that many small business owners are unaware of how they can secure funding, and which type of funding is most appropriate for their company’s needs.
For businesses operating in Illinois, there are several options for finding and receiving money when it is needed most.
Below is a guide to small business loans, grants, and investors specific to Illinois small businesses, along with strategies to determine which funding is the most attainable for companies based on their needs.
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Small Business Loans in Illinois
Illinois small business owners might seek out financing through small business loans. There are several financial institutions offering loans to qualified small businesses operating in the state, although qualification requirements and funding amounts vary greatly from lender to lender. Below are several online companies offering small business loans in Illinois.
As low as 6.00%
$5,000 – $2 million
1 – 5 years
The above information is for the Lendio Business Term Loan.
Lendio is the largest small business loan marketplace in the U.S. with a network of over 300+ lenders. These lenders include PayPal, Bank of America, American Express, and more.
You can apply with one simple application without impacting your credit. The application process can be completed online in 15 minutes with no fee or obligation. If approved, funds can be made available in as little as 24 hours.
- Short term loan
- Business term loan
- Business line of credit
- Merchant cash advance
- Business credit card
- Equipment financing
- Commercial mortgage
- Startup loan
- SBA loans
- Accounts receivable financing
- Business acquisition loan
9.77% – 35.98%
$5,000 – $500,000
6 – 60 months
The information above is for the LendingClub Business Term Loan.
LendingClub is a peer-to-peer lender that connects investors with businesses in need of financing in Illinois. To be eligible, businesses must have at least $50,000 in annual sales, as well as been in business for 12 months or more.
You can apply online in under 5 minutes and receive multiple quotes. If you decide to pay off your loan early, there are no prepayment fees to worry about.
7.00% – 69.00%
$500 – $250,000
6, 12, or 18 months
The information above is for the Kabbage Business Line of Credit.
Kabbage is a small business lender offering a business line of credit in Illinois. The lender has a low minimum loan amount which can make it a good option for those in need of a small amount of financing.
In order to be eligible, your business needs to be at least 12 months old, with $50,000 in annual revenue.
Small Business Grants in Illinois
In Illinois, small businesses have many opportunities to receive grant funding, which in some cases, is the most desirable type of financing available. Illinois small business grants are paid out to qualifying companies without a need to repay the balance – or interest – over time.
However, small business grants in Illinois and throughout the country have certain work requirements that must be met in order to continue receiving funds. Here are several small business grant opportunities for Illinois business owners.
Illinois Sustainable Agriculture Research and Education (SARE) Program
Since its establishment in 1988, the Sustainable Agriculture Research and Education program, or SARE, has offered grant funding to small businesses throughout Illinois. The grant program is available to companies that work on projects intended to improve the knowledge base and effectiveness of professionals in agriculture through educational programs.
These programs must operate with the purpose of enhancing the sustainability of communities and agricultural systems. Applications for the Illinois SARE grants are awarded in $1,500 increments, and applications are accepted on a continual basis. An application form, as well as additional details about Illinois SARE grants, can be found online.
Chicago Foundation for Women Grants
The Chicago Foundation for Women is one of the largest finance providers to women business owners in and around Chicago. The organization offers grant funding ranging from $15,000 to $150,000 to businesses located in Cook, DuPage, Lake, Kane, McHenry, and Will counties, Illinois. Projects that qualify for grant funding are focused on economic security, freedom from violence, and access to healthcare. Small business owners around the Chicago metropolitan area can apply online either during the spring or fall cycles each year.
Recycling Expansion and Modernization (REM) Program
Through the Illinois Institute for Rural Affairs, small business owners in the state may qualify for grant funding through the Recycling Expansion and Modernization Program. The REM grant program awards matching grant funding to organizations and businesses focused on achieving recycling expansion and waste reduction. Any business operating in Illinois with this initiative is eligible to apply for grants ranging from $150,000 to $250,000. Applications are accepted year-round and can be submitted to the Illinois Department of Commerce and Economic Opportunity.
FedEx Small Business Grant Contest
Although this grant financing opportunity is open to small business owners throughout the country, the FedEx Small Business Grant contest is worth mentioning. Up to $50,000 in total funding is available for qualified small business owners with fewer than 100 employees. Businesses submit their application online, and open voting takes place throughout the contest. The most compelling business stories are the most likely to receive grant funding.
Women and Minorities in Science, Technology, Engineering, and Mathematics Fields Program
The Women and Minorities in STEM program offers grant funding to eligible business owners in Illinois, supported by the USDA. The program is intended to support research, teaching, education, and local projects that grow the participation of women and minorities from rural areas in STEM fields. The total program funding is $400,000, but grant amounts vary depending on the work proposed by each awardee. Applications for the Women and Minorities in STEM grant program are accepted year-round, and they are submitted through an online platform.
Small Business Investors in Illinois
The final option for small business financing in Illinois is investment from outside firms or individuals. Illinois is ripe with investors, from angel and seed investors to established venture capital funds. Business owners may give up some control in the daily operation of the business when investors fund the company’s projects, expansion, or product launch. Here are several small business investors headquartered in Illinois.
As an early-stage seed investment firm, Illinois Ventures focuses on providing financing to small businesses operating in information technologies, physical sciences, and life sciences. Illinois Ventures has funded several notable companies in the form of grants, seed funding, and full venture capital. Most small businesses connect with the investment firm when they are still in the research stages of development. Small businesses can contact Illinois Ventures online.
Open Prairie Ventures
Small businesses operating in rural areas of the state may have an investment partner in Open Prairie Ventures. This investment firm focuses on providing financing to technology-based, high-growth businesses in agriculture, medical device technology and development, and biotech. The firm has managed more than $195 million in small business capital since its inception in 1997. Small companies interested in pitching a business plan to Open Prairie may connect with the firm online.
LEO Capital Holdings is a unique investment firm in Illinois in that it focuses on high-growth companies developing consumer-oriented technology and applications. Initial investments from LEO Capital range from $1 million to $3 million, but only companies that have the potential to mature within five years are considered. The investment firm has recently funded small businesses in entertainment, wireless healthcare applications, and youth-focused tech. Small businesses wanting to connect with LEO Capital may find more information online.
Getting Your Business Ready for Financing
Although there are several options for financing for small businesses in Illinois, it does take some effort to prepare for applying. For grant applications, businesses need to have a clear plan for achieving the work or project required by the grantor, and a strong overall business plan in place.
For business loans and outside investments, more stringent requirements apply. For instance, financial institutions may require a small business to have business bank accounts, cash flow and balance sheets, as well as any documentation about other outstanding debts owed by the company. Investors are more likely to ask for realistic revenue trajectories and market reach based on the product, service, or business idea they are asked to fund.
Being organized and having the right documentation about the company’s finances are essential to securing financing.
What Kind of Financing Do You Need?
Each business has different needs in terms of financing from grants, loans, or investors, and so it can be a challenge to know which is most suitable for your company’s circumstances.
Small business grants are typically most appropriate for companies willing and able to contribute to the economic or environmental landscape of their immediate community. Grants are also best for those small businesses that have the capability and know-how to meet specific grant requirements over a short or long period. Businesses focused on generating more revenue, expanding, or purchasing inventory or equipment are not likely to qualify for grant funding.
Small business loans can be used by just about any company, and mostly, for any purpose the business sees fit. However, conventional banks and lenders offering small business loans need to feel confident in the company’s ability to repay the financed amount over time. Only small businesses with strong personal and business credit histories are likely to qualify.
Finally, outside investment through angel or seed investors or venture capitalists is only a viable option for companies that have an impressive growth trajectory. Technology companies are often most likely to receive outside investment financing, but that does not mean all tech firms should pursue this route. Investors often require some stake in the business, either as an equity agreement, a management position, or both. Outside investors can be an invaluable addition to a small business, but only when the business owner is willing to give up some control over how the company operates.
Author: Jeff Gitlen