In Alabama, small businesses are an integral part of the state’s economic success. In 2016, the U.S. Small Business Administration Advocacy Group reported that small businesses in the state employed over 700,000 people. These Alabama small businesses (a total of over 300,000 individual firms) made up 81 percent of the state’s exports.
The importance of these businesses is why it’s also essential to make funding easy to find and readily accessible.
Owning a small business and being your own boss can be a lonely road. It’s challenging to fund the entire entrepreneurial endeavor on your own. Finding outside funding is common for businesses looking to take the next step in their development.
In Alabama, small businesses are succeeding through the support of a network of angel investors, local organizations awarding small business grants, and regional financial institutions providing small business loans. No matter what you need the injection of capital for and no matter the sector, there is likely a myriad of possible funding options on the table for you and your business.
Yet, not all business owners know all the possible Alabama small business financing options that are open to them. No matter the sector, there are grants, loans, and investor programs out there for owners of small to large businesses to take advantage of.
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Small Business Loans in Alabama
The most conventional form of funding for small businesses is the traditional Alabama small business loan. Small business loans, especially for established companies, are often the route of least resistance. Banks take on the risk of lending and are (hopefully) rewarded by receiving the initial loan amount back plus interest. Traditional loans are often the first type of financial capital companies access prior to undertaking the next steps in their development.
Here are a few companies that offer small business loans in Alabama:
Alabama Credit Union
Established in 1956 in Tuscaloosa, the Alabama Credit Union now has locations across the state. University students favored the bank as a nonprofit credit union delivering higher than average returns on deposits but now it offers a wide variety of services including small business loans. Terms and conditions vary widely between one small business loan to the next, so it is best to set up an in-person meeting with a financial services representative to go over the details.
You’ll need to have three years of tax returns, both business and personal, with you, as well as a personal financial statement of your assets. Their small business loans offer critical funding for building and property purchases, large equipment purchases, and property refinancing, among others.
People’s Bank of Alabama
Owned by Altrust Financial Service, Inc, the People’s Bank of Alabamaoriginally established themselves in the state in 1977. The People’s Bank of Alabama has a few financing options available to business owners, including conventional term loans, lines of credit, construction loans, and even assistance accessing government lending programs.
They strive to provide flexible interest rates and terms, which will vary depending on context and business needs. As is the case with most traditional small business loans, it’s always best to set up an in-branch meeting with a business credit professional to determine which option works best for your business’s needs.
North Alabama Bank
The North Alabama Bank is the “Hometown Bank of Choice” in Madison County. They offer all types of credit options to all sizes of businesses in their region. This includes agricultural loans to farms, commercial loans to larger companies, and small business loans for those just starting out. If your business is looking for financing, and you operate within their area of coverage, set up a meeting with a financial advisor to see what the North Alabama Bank can do for your small business.
First Bank of Alabama
Offering solutions for small businesses in the state, the First Bank of Alabamacan provide loans for those needing an injection of financing to cover real estate purchases, equipment financing, funding for construction or expansion, or even small business loans for working capital. As always, terms vary depending on the business’ financial situation and need. They have been in the state of Alabama since 1848, and are focused on providing local knowledge to local clients.
Small Business Grants in Alabama
For a small business, winning a grant is a shot of cash with no repayment requirement. The competition is fierce, but the rewards make the application process worthwhile. Alabama small business grants may come with a few initial conditions, but unlike loans, they do not come with interest rates or challenging repayment plans. Here are a few available in Alabama:
Rural Energy for America Program Renewable Energy Grants
A national program, especially applicable to the state of Alabama where there are more than 3,400 farms and one out of every 4.6 jobs is in the agricultural sector. This program is meant to help small rural businesses and farms with the necessary funding to install or improve renewable energy systems or to make energy efficiency improvements. Energy efficiency grants range in value, between $1,500 to $250,000, and the renewable energy grants range between $2,500 to $500,000.
Womensnet Amber Grant
Women-owned businesses in Alabama account for a total of 30 percent of the companies in the state. The Womensnet’s Amber Grant awards $1,000 each month of the year to a female small business owner. The application deadline is the last day of the month. On top of the monthly award, they also enter all yearly winners into an annual $10,000 grant. There is a $15 application fee but the grant process can be done quickly and easily online.
Small Business Investors in Alabama
Deciding to open your business to outsiders is a big decision to make. It is often difficult for small business owners to give away partial control or a financial stake in their company. But the benefits of finding a venture capitalist or angel investor can have massive payoffs. Angel and venture capitalist investments not only come with cash but with industry expertise and knowledge. Alabama has many alternative investment options on the table.
The AIM Group
Focused on investing in small early-stage businesses in the Southeast of Alabama, the AIM Group is interested in many different industries. They seek to fund “tech enabled opportunities addressing a large market.” Their minimum investment is $500,000, but the average is between $750,000 to $1 million. To date, they have invested over $2.5 million in local Alabama industries, in eight chapters with their 272 members.
An Alabama angel investment group, funding entrepreneurs who have graduated from incubator, accelerator, or university programs in the state. Members (angels) ofInCrowd Capital are diverse, with experience in all industries. InCrowd is a database bringing together angel investors and entrepreneurs, as such, its members invest broadly, across a wide variety of industries.
Advantage Capital Alabama
Since their inception, Advantage Capital Alabama has invested in over 700 companies across the state, equivalent to $2.6 billion. They specifically target regions which are underserved by the more traditional lending and investment platforms, but invest broadly in diverse industries. Established and emerging companies are both eligible for conventional asset-based and cash-flow-based loans as well as subordinated and mezzanine loans.