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 conventional 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 small business loan options from financial institutions in Illinois.
As a micro-lender, Accion offers small business loans to companies headquartered in Illinois that meet certain eligibility requirements. Accion is a nonprofit organization that works with several statewide small business agencies and other organizations to connect businesses to the right loan. Accion small business loans are available for up to $50,000 to businesses that have relatively stable financials and moderate to excellent credit history. Applications for Illinois small business loans with Accion are submitted online.
Village Bank and Trust
The local small business lender, Village Bank and Trust, offers several financing options for qualified companies. With the lender’s term loans, small businesses may be eligible for financing up to $75,000 to help with equipment purchases, expansion, or other long-term business needs. The bank also offers Small Business Administration (SBA) loans under the 7A, 504, and Express loan programs. Each business application must supply detailed information about the company’s financial history, personal credit history of the owner, and other loans or debts currently outstanding. Applications can be submitted online.
Central Illinois Bank
Another small business loan option is Central Illinois Bank, which provides an array of term loans, real estate financing, and credit lines to qualified businesses in the state. Loan amounts and terms vary depending on the credit quality of the business applying, as well as the intended use of the loan proceeds. Applications for Illinois small business loans through Central Illinois Bank are only accepted in person at a bank branch location.
Illinois National Bank
Small business owners also have financing options with Illinois National Bank. The financial institution offers term loans to help cover expenses like payroll, expansion, or purchasing inventory or equipment. SBA loans are also available to eligible businesses. The terms and loan maximums with Illinois National Bank depend on the creditworthiness of the small business application and the intended use of the loan funds. Applications are accepted at Illinois National Bank branch locations.
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.