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You might be seeking small business financing in Iowa for one of several reasons. You may be in the early stages of launching a completely new business, for example. You may want to expand an existing business, or perhaps you have a specific investment in mind such as purchasing new equipment.
One of the most common ways people get small business financing is through small business loans, usually from banks and credit unions. There are other options as well. Grants are considered “free money,” and they’re available from private organizations, as well as from state and federal governments.
Other options are private investments from individuals, angel investors, and venture capitalists.
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Small Business Loans in Iowa
Small business loans are an option to get funding in Iowa. A small business loan usually requires that you go through a bank or credit union. You receive financing based on factors like creditworthiness. Then you pay the loan back, with interest over the set term. Some people prefer small business loans as opposed to loans through investors because they can retain full control of their business.
Here are some Iowa small business loan options:
Des Moines Metro Credit Union
The Des Moines Metro Credit Union provides small business loans in Iowa, through a partnership with Community Business Lenders. The types of loans include SBA 504 Loans, SBA 7(a) Loans, real estate loans and revolving lines of credit.
Cedar Rapids Bank & Trust
This bank is one of the top SBA loan providers in Iowa. It is designated as both a Preferred and Express Lender by the SBA. Loans here include the Standard 7(a) Loan, with financing of up to $5 million. They also offer the SBA Express Loan, with funding up to $350,000.
Grow IOWA is a foundation that provides low-interest loans to businesses in the state. The organization works with local banks, and max loans of up to $250,000 are available. Applicants have to provide part of the project cost as equity through their own assets or grant funding, and loan terms go up to 10 years.
Small Business Grants in Iowa
Small business grants provide funding that doesn’t have to be repaid. Despite this big advantage, it can be time-consuming to find grants you qualify for. Many grant programs also have rigid application requirements, and typically will require that a business regularly submit evidence that they’re using the funds as they said they would.
Some of the small business grants in Iowa include:
- Small Business Startup Grant Program
- Small Business Forgivable Loan Program
- Blade Sign Grant Program
- The Iowa Innovation Acceleration Fund
- The Economic Development Set-Aside (EDSA) Program
- Targeted Small Business Financial Assistance Program
- Entrepreneurs With Disabilities Program
- Amber Grants for Women
- Dream Big Grow Here
Small Business Startup Grant Program
This is a grant program offered by the city of Walnut in Iowa. This grant program is designed to encourage entrepreneurs to start businesses in Walnut, and it provides up to $5,000 in grant funding who are located within the city limits of Walnut. To be eligible the business should have fewer than five full-time employees.
Small Business Forgivable Loan Program
This program offered by the City of Muscatine is a little different from a traditional loan program. The Small Business Forgivable Loans can be used for startup costs and building improvements. Businesses can get financing up to $25,000 and can have 20 percent of the loan forgiven annually.
Blade Sign Grant Program
This loan program is available to businesses in Greater Burlington, and it provides up to $500 in matching grant funds for businesses who install a certain type of signage.
The Iowa Innovation Acceleration Fund
This fund is designed to help technology businesses create high-paying jobs. The funds can be used to launch startups, accelerate private investment, and commercialize resources. The funding is available to finance businesses that are in different stages of growth. There’s Iowa LAUNCH for pre-seed capital stage financing, Iowa PROPEL for seed capital stage financing, and Iowa INNOVATION EXPANSION for expansion-stage financing.
The Economic Development Set-Aside (EDSA) Program
This provides help to businesses making a capital investment and that focus on creating employment for low- and moderate-income individuals. EDSA funds business projects located in smaller Iowa cities with a population of fewer than 50,000. Assistance is provided as loans, but also forgivable loans. The maximum award is $500,000 per project.
Targeted Small Business Financial Assistance Program
This program is designed to help Iowa small businesses that are at least 50 percent owned, operated and managed by women, minorities or people with disabilities. The program offers low-interest loans as well as equity grants of up to $50,000. Small businesses should have $4 million or less in annual sales to be eligible.
Entrepreneurs With Disabilities Program
Under this program, funding may be available to help people with disabilities start, acquire, maintain or grow a small business. Entrepreneurs can qualify for up to $10,000 in financial assistance.
Amber Grants for Women
This program is available throughout the country, including in Iowa. Amber Grants for Women provides $1,000 a month in business funding, and then each of the year’s 12 winners competes for a $10,000 award at the end of the year.
Dream Big Grow Here
This Iowa business grant program is designed to support small Iowa companies and to improve the overall economy of the state. The program’s application window is during fall. Businesses must have fewer than five full-time employees and have been in operation for three years or less to be eligible. They should also be located in one of the following counties: Lyon, Plymouth, Cherokee, Osceola, Sioux, Monona, Woodbury or O’Brien.
Small Business Investors in Iowa
Along with bank financing and grants, businesses in Iowa might want to pursue funding from investors. The two main types of investors are angel investors and venture capitalists. Angel investors tend to be more willing to invest in smaller companies and businesses that don’t yet have a lot of revenue. An angel investor is usually a high-net-worth individual, and venture capitalist firms are usually formed as Limited Partnerships.
An angel investor will often provide funding earlier on than a venture capitalist. Often, when a small business takes an investment from an individual or a firm, they have to give up ownership or control of some portion of their business.
Small business investors in Iowa include:
- AAVIN Equity Partners
- Next Level Ventures
- Midwest Growth Partners
- Plains Angels
- River Glen Private Capital
AAVIN Equity Partners
This is a venture capital fund that prefers buyouts and expansions in companies that have at least $1.5 million in cash flow. They don’t have a sector preference, but they do prefer to invest in companies in the Midwest. AAVIN Equity Partners is based in Cedar Rapids.
Next Level Ventures
This is a venture capital firm based in Des Moines that prefers to work with innovative and technology-based businesses. They usually look for opportunities with businesses that have at least a $1 million in sales. Their preferred investment is $1 million to $4 million per company.
Midwest Growth Partners
Based in West Des Moines, this firm likes late-stage and mature companies, and they invest throughout the upper Midwest. Their preferred investment size is $500,000 to $5 million.
This group of Angel investors is based in the Midwest, and they work with early-stage growth companies.
River Glen Private Capital
This group of angel investors works primarily with a few sectors: bio-renewables, agriculture technology, and healthcare. They prefer an investment size of $250,000 to $1 million.
Getting Your Business Ready for Financing
Exactly what you need to do to get your business ready for financing can depend on the type of financing you’re seeking. Regardless of whether you’re seeking bank financing, grants, or investments, you will need a strong business plan. You need to be able to demonstrate why you deserve funding, and how you’ll put it to use.
A business plan should include:
- An executive summary
- An overview of your business including your history, legal structure, location, and how you do business
- Operations plan which should highlight how you plan to function or currently function. You should also outline who is responsible for what
- Sales and marketing are very important. You want to show your current sales information, and also how you plan to grow, and what role marketing and advertising will play in your business
- Competitive analysis
- An overview of your management team
- A financial plan is going to be one of the most important elements of your business plan as you get ready for financing. This should indicate the amount of money you’re seeking, what you’ll need for the next three to five years, how you plan to use funding, and what your ongoing expenses are
- Projections for to next two to three years at a minimum
If you’re seeking a loan, you may need to show your personal creditworthiness or tax information and credit information for your business currently. For grants, you should research options that are a good fit for your business and your needs, as well as ones you’re likely to be approved for.
What Kind of Financing Do You Need?
When determining the kind of financing you need for your business, there are a few primary considerations. Start by looking for grants because you don’t have to pay this funding back or relinquish ownership of your business.
Then, think about what stage you are at in your business. If you’re further along and your business earns revenue, you may be able to get private investment. At the same time, you may not be comfortable giving up any level of control in your business to private investors.
If you believe you’ll have strong cash flow in the coming months and years, financing from a bank or traditional lending institution may be a good option. You do have to realize that you’re taking on debt, so your cash flow needs to be able to support paying that debt back.
At the same time, with a small business loan, you stay in control of your business operations. However, if you go with bank financing, you will probably have to share a lot of financial information, and approval may be depend not only on the creditworthiness of your business but also your individual situation.
Every business has a different financing need, but knowing your options and exploring them fully will help you make the best decision.
Author: Ashley Sutphin