Financing Your Business
Funding is often times the missing link between entrepreneurial dreams and the reality of a sustainable business. Funding sources are difficult to locate in today's economy and the process can be overwhelming.
The Small Business Development Center can help you locate sources of capital for your business, as well as help you prepare a complete loan package.
Click here for a Guide to Loan Programs for Whatcom County or Guide for Canadian Businesses Investing in Whatcom.
Types of Funding
Conventional Business Loans & SBA Loans
When it comes to financing your small business, you have two primary loan options: loans guaranteed by the U.S. Small Business Administration's (SBA) Guaranteed Loans Program or conventional commercial bank loans.
SBA Loans
These are commercial loans provided by a bank but are guaranteed by the federal government. To qualify as a small business under current law, a business must demonstrate that it has less than $15 million in tangible net worth and two years' net income after taxes of less than $5 million. Following are some of the SBA loan programs and their descriptions.
7(a) LOAN PROGRAM: The most popular and flexible loan program, 7(a) loans provide guaranteed financing for a variety of general business purposes. Possible loan maturities are available up to 10 years for working capital and generally up to 25 years for fixed assets.
504 LOAN PROGRAM: This program is for those desiring long-term, fixed-rate financing. If you foresee expansion, land purchase, and construction costs, this may be the program for you. It is backed by the SBA but delivered by Certified Development Companies (CDCs). Maturities of 10 years or 20 years are available and fees total approximately 3% of the debenture and may be financed with the loan.
MICROLOAN PROGRAM: This program provides small, short-term loans for working capital or the purchase of inventory, supplies, equipment etc. It delivered through specially designated intermediary lenders who each have their own requirements. The maximum term allowed for a microloan is six years and interest rates vary between 8% and 13%.
CAPLINE PROGRAM: This program helps small businesses meet their short-term and cyclical working-capital needs. SBA CAPLines have a maturity of up to 5 years and is tailored to an individual business's needs.
Conventional Commercial Bank Loans
It is best to start with your own local bank who will take the time to understand your company's objectives, and create a finance package that will fit your unique business needs. The costs and requirements may differ from bank to bank.
Alternative Lending Sources
Alternative lending sources include borrowing from friends and family, peer-to-peer lending sites like
Prosper.com and
LendingClub.com and
crowdfunding platforms like Kickstarter.com
The Whatcom Investing Network is a network of people looking to meet with and form relationships with local businesses that they wish to invest in.
Angel & Venture Capital
The Bellingham Angels are a group of accredited investors dedicated to providing equity capital to early and mid-stage entrepreneurial companies. They primarily focus on companies based in the Pacific Northwest, with emphasis on those companies located in the Whatcom, Skagit and Island Counties of Washington State.
Local Economic Development Funding/Programs
The NW Economic Council runs a program called the "Revolving Loan Fund" focused toward manufacturers in Whatcom County.
The Port of Bellingham provides tax exempt financing for manufacturing and processing businesses.
Whatcom County Alternative Capital Sources
WWU SBDC recently partnered with the Port of Bellingham to provide a forum designed to educate lenders and established businesses about non-conventional finance programs available to Whatcom County businesses. You can view a copy of the presentation slides here:
