North Carolina has been experiencing strong economic growth over the past decade. Business has been thriving due to the skilled population, low tax rates, and emergence as a technology research hub.
The state has many financing opportunities available to small business owners, depending on what the business offers and the type of funding they need.
Keep reading to see what options you have in North Carolina.
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Online Small Business Lenders
Small Business Bank Loans in North Carolina
If you’re looking to fund your small business in North Carolina using a bank loan, there are many banks in the state where you can shop for the best rate and terms.
Check with the bank to see if you might be eligible for a loan. If so, gather the proper documents and information they require, and have everything ready for the application process.
It might also be challenging to get a loan if your business is new, with no business credit or a limited track record to show a lender. In those cases, the lender looks to the owner’s personal finances for assurance that the loan will be repaid. In the eyes of the lender, the small business owner’s personal ability to pay is just as important as the business’s financial projections.
But a business loan can help you avoid cash flow issues or give you room to grow when you need it. Here’s a look at the banks that offer small business loans in North Carolina.
Self-Help Credit Union – This credit union provides small business loans up to $250,000. The bank analyzes the business’s cash flow projections, financial statements, debt-to-income, creditworthiness, and management experience. Last year, Self-Help provided “$75 million in loans to small businesses and nonprofits, creating or maintaining 1,170 jobs” said Chief Executive Officer Martin Eakes.
First Bank – Small business owners can get a business financial consultation with one of the bank experts to find out what funding alternative would best meet their needs. The bank offers construction loans, business lines of credit, and lump-sum small business loans.
Live Oak Bank – The bank started with a focus on lending to veterinary practices and eventually moved into other industries. Its focus is on small business financing, and the bank has experts in a number of industries to provide financial advice for clients. Small business loans are available for up to $7.5 million with flexible loan terms that can extend as long as 25 years.
Select Bank and Trust – This bank offers commercial loans for businesses to purchase equipment and real estate. It also administers Small Business Association (SBA) loans for small business needs such as equipment, working capital, and other investment needs.
Coastal Credit Union – Coastal Credit Union serves the needs of small business owners in North Carolina, South Carolina, and Virginia by providing loans at competitive rates. Small business owners with a good financial track record are eligible for loans up to $50,000.
Other Small Business Loans in North Carolina – Banks aren’t the only places that can loan you money for your small business. Plenty of community organizations also offer loans for small businesses. Here’s a look at other funding opportunities in North Carolina.
Carolina Small Business Development Fund – This organization provides loans up to $250,000 for businesses in a variety of industries. The interest rates vary from 8% to 11%, and business owners must submit a package with financial statements, business plan, and management resumes.
#BLKTECHCLT – This is a loan fund created to provide loans up to $10,000 to support African-American entrepreneurs from any industry in the Charlotte metropolitan area. Applicants should have a strong business plan and cash projections as well as good personal credit.
North Carolina Rural Center – This initiative provides small business funding to rural areas not served by traditional lenders. Small business owners in rural areas can get funding up to $50,000 for borrowers with strong business plans and financial projections.
Center for Economic Empowerment Development – The center supports access to capital for inexperienced and less qualified small business borrowers. It provides funding in amounts between $2,500 and $200,000.
City of Winston-Salem – The city government provides small business loans in North Carolina to owners who place their business in a strategic neighborhood revitalization area. The city matches funding provided through bank loans or other means, and the average loan amount is for $35,000. Business net worth cannot exceed $6 million, and net profit after taxes must be less than $2 million over the past two years.
Small Business Grants in North Carolina
Getting a small business grant is an ideal way to fund your business since it’s money that you don’t need to pay back. Grants also do not require you to give up any equity in your company. However, qualifying for a grant can be challenging as there are often strict guidelines for eligibility – or it can simply be very competitive.
Keeping that in mind, take a look at some of the top small business grants in North Carolina.
WomensNet – This organization awards grants of $1,000 every month to help fund women-owned small businesses. At the end of the year, winners are also eligible for the annual Amber Grant of $9,000.
JobsRaleigh – This organization provides grants up to $15,000 to small businesses for job creation and retention in the city of Raleigh.
City of Charlotte Business Investment Grant – The organization encourages creation, retention, and expansion of small business activity, particularly in areas designated as Investment Zones in the community.
Small Business Investors in North Carolina
So perhaps your business just doesn’t qualify for a grant – or at least one that will meet your needs. And maybe your company doesn’t have the business credit or financial stability to get a business loan. You might want to approach investors to help you take your business to the next level.
Whether you’re looking for venture capitalists, angel investors, or seed investors, you do have a variety of options in North Carolina. Here are a few to consider.
Intersouth Partners – This venture capital firm is based in Durham, N.C., and specializes in investment opportunities in the technology and life sciences sectors. The firm currently has $780 million invested in seven venture capital limited partnerships.
Hatteras Venture Partners – A venture capital firm that is based in Durham, Hatteras Venture Partners currently has approximately $450 million under management in five investment funds. The firm primarily invests in early-stage companies focused on biopharmaceuticals, medical devices, and healthcare IT.
Charlotte Angel Fund – This fund is a group of investors in the Charlotte area who invest in early-stage companies with strong management teams and promising business opportunities in large markets.
Wilmington Investment Fund – This fund of angel investors is located in Wilmington and provides funding for early-stage companies with high growth potential. They seek investments with a high potential rate of return.
RTP Capital Associates – RTP is a group of angel investors who are passionate in their desire to help entrepreneurs by providing guidance, mentoring, networking, and insight in addition to investment funding. They seek investments across a variety of industries that have high growth potential.
Getting Your Business Ready for Funding
Regardless of whether you are seeking grant funding or venture capital investment, the people evaluating your application are going to be looking at similar supporting materials. The first thing you will need is a comprehensive business plan.
The business plan should outline the position of your business in the market and highlight how your business will succeed in that market. It should also include financial projections that give a realistic view of income and expenses over the next few years.
Anyone lending money to a small business will want to see that their investment provides adequate growth opportunities for the small business. Growth prospects are a sign that the lender will get repaid in the future.
Lenders also want to see information about the business leadership team. A business management team with training, experience, and a record of success in their specialty areas reduces the risk of the investment from the perspective of a potential lender or investor.
From a financial perspective, the lender will evaluate the potential financial success of the business in two ways. The main concern for a lender or investor is that they will be able to get their money paid back as expected. So you’ll need to provide at least one year of financial statements and tax returns for the business.
In addition, the lender may evaluate the business owner’s personal credit and financial situation. This is because your ability to successfully manage your own personal finances is a signal about whether or not you’ll be able to manage the more complex finances of a business.
What Kind of Financing Do You Need?
The kind of financing you need is dependent upon the type of business you own, how much money you need, and your future financial prospects. Grant funding is preferable because you don’t have to repay the money like you do with a loan. Grants, however, are usually only available for very small funding needs.
In addition, many grants are geared toward supporting specific niches of businesses and business development in targeted areas. If you and your business don’t fit those needs, a grant may not be the right choice.
The next option to explore is a small business loan. Many small business owners seek federal funding through the Small Business Association. You apply for and receive money through a local bank, but the loan funding comes from the federal government to support small business growth across the country.
Another option is to find a bank that specializes in small business lending. If you need a loan of at least $50,000 and have good personal credit, a bank small business loan is probably the best option. The bank, however, will want to see that your personal financial history and the company financials and growth projections support the ability to repay the loan over a period of 10 to 20 years.
If you want to get a small business loan but don’t have the strong company financial statements and background that a bank requires, there are other sources of loans for small business owners. Many economic development and community development funds exist at both the state and local level.
The dollar amount of funding is smaller through these funds than it is through a bank, but the requirements for approval are not as stringent. In addition, these funds tend to support small business owners in endeavors that are particularly important to the local communities they serve.
If your small business is part of the technology industry and has the capacity for high growth with high capital needs, banks and other forms of loans may not be willing to provide enough funding to meet your needs. In these cases, you’ll want to seek out funding from angel investors and venture capital firms.
Angel investors usually seek to invest less money than venture capital firms and require less of an ownership stake in return for their funding. When you bring in angel investors or venture capital firms, however, expect to lose a lot of autonomy in the way you run the business in exchange for cash.