From loans and grants, determine the best way to finance your business.
For an overview on how to fund your business, visit the SBA's website.
Funding your business: Starting a business can be expensive. But there are resources such as grants and low-cost loans to help you finance your business. Be sure that you plan and save enough cash to operate your business for at least the first two months. This may include the amount of money you need to cover your startup expenses such as buying equipment as well as permit or license fees. It may take time to set up before you have enough customers to be profitable.
Using the calculations and estimates from your business plan, decide if you have enough money to begin, or if you need additional capital first. Lenders want to see that you have some of your own capital invested in your business.
Financial Projections: You will need financial projections for at least the first three years of operation including a forecast of future sales and the costs to run your business.
Business Line of Credit: Similar to a credit card, you can borrow up to a certain limit and pay interest only on the money you have borrowed. You repay the funds but can continue to draw on the line. Business lines of credit are used for managing cash flow, buying inventory, and covering payroll.
Loans: There are many types of loans available to business owners such as SBA loans, Term loans, and equipment financing loans. Many banks will also give loans to small businesses. Loans may be used to buy commercial kitchen appliances, flatware, furniture, and other items needed to run the business. The requirements for these loans may be more demanding and interest rates may also be higher.
Sources of Capital
SBA offers a Lender Match program to help you find the right financial institution for you and your business needs. Rather than invest all of your personal savings, take out personal credit card debt, or borrow from family and friends, We encourage you to contact a bank, credit union, or Community Development Financial Institutions (CDFIs). CDFIs are specialized community based financial institutions with a primary mission to promote economic development by providing financial products and services to people and communities underserved by traditional financial institutions, particularly in low income communities.
Local Sources of Capital
ObviouslyDC Funding Opportunities
Various existing and new grant programs will be available through the DMPED cluster in fiscal year 2022 to support economic recovery by providing support to businesses and entrepreneurs. Program details will be added here as they become available.
CFE: City First Enterprises (CFE) offers small business lending solutions include term loans and lines of credit, including capital for launching or expanding businesses. Small business finance ranges from $50,000 to $400,000. CFE is a mission-driven institution working at the intersection of financial innovation and impact investment. To help mitigate economic and racial inequity, CFE capital is put to use by supporting affordable housing, small businesses, increasing access to community facilities for the arts, health, education, and other social services, and to support sustainable living through green energy.
Latino Economic Development Center (LEDC) offers a business advice program as well as loans of up to $250,000 with low rates. LEDC equips Latinos and other underserved communities with the skills and financial tools to create a better future for their families and communities. Participants in our programs learn how to build their long-term financial security by buying and staying in their homes, taking control of decisions affecting their apartment buildings, and starting or expanding their small businesses. The entire DC-MD-VA region and Puerto Rico is stronger when all families have the power to achieve financial independence and join with their neighbors to improve their communities.
The Washington Area Community Investment Fund’s (Wacif) offers micro, small business, and working capital loans. mission is to promote equity and economic opportunity in underserved neighborhoods in the Washington, D.C region. Established in 1987, the Washington Area Community Investment Fund’s mission is to increase equity and economic opportunity in underserved communities in the Washington, DC area by investing knowledge, social, and financial capital in low- and moderate-income entrepreneurs. Our mission is driven by three strategic pillars: inclusive entrepreneurship, community wealth building, and equitable economic development, and is fulfilled by providing access to capital products and services, and capacity building technical assistance to low- and moderate-income entrepreneurs.
Other Forms of Capital
Grants: Grants are available for business. Some grants are for businesses at a specific stage, to provide Covid-19 assistance, or to support business owners from certain communities (i.e., women, BIPoC, startup).
Washington DC Women's Business Center Grants
Washington, DC Department of Small and Local Business Development
Capital Area Asset Builders (CAAB)
Investors: Business owners may pursue investors to cover startup costs. In addition to money, investors may provide other assistance such as marketing, public relations and financial planning.
Crowdfunding: Crowdfunding is the process of raising funds for a business from a large number of people, called crowdfunders. Crowdfunders aren’t technically investors, because they don’t receive a share of ownership in the business and don’t expect a financial return on their money. Instead, crowdfunders expect to get a “gift” from your company as thanks for their contribution. Often, that gift is the product you plan to sell or other special perks, like meeting the business owner or being acknowledged somehow. Crowdfunding is a popular option for new businesses and entrepreneurs since it helps build awareness and potential customers. Crowdfunding is also popular because it’s very low risk for business owners. However, there could be risks and obligations if the business does not succeed. Every crowdfunding platform is different, so make sure to read the fine print and understand your full financial and legal obligations.