It’s the age-old quandary: You need money to make money.
If you’re applying for a business loan, your lender will likely require as much as 25 percent down toward purchasing a building for your business. Even more equity and working capital may be needed for equipment and operating costs.
We hear every day about the availability of financing programs for small business. But without solid assets, even the best business plan won’t close the deal. When you have done your research and are ready to launch, it’s frustrating to hear that without having money already in hand through savings, equity and stable sources of income, you can’t get the loan you need.
You have a great idea, a comprehensive business plan, a well-researched market and a determination to succeed. But you have no money. So how do you launch your dream and leverage resources for growth?
Carol Ayoob, owner of The Whole Potato Café & Commons in Presque Isle, developed her business plan in Women, Work and Community’s 12-week New Ventures Entrepreneurship Training.
Carol came to the program as a practicing artist, community organizer and graduate student in the University of Maine Intermedia MFA program. In the New Ventures class, Carol learned to think artistically and analytically about her business market, financial management and operations.
Though she had a strong business plan, Carol still needed to demonstrate to lenders that she was worth the investment. Her prior experience in the sector spoke in her favor, but Carol had limited income because she was pursuing her art and degree.
Carol’s outreach to community investors was her strongest case to lenders. She secured $7,000 from friends and colleagues who knew and supported her work. With that money, she was able to leverage a $10,000 loan from Northern Maine Development Commission.
Carol also turned to the Family Development Account program to support her business start-up. The state program provides individuals who have limited income and assets with the opportunity to save up to $1,000 of personal investment and get their savings matched 4:1 toward a college education, first-time homeownership, or a small business start-up or expansion. In Carol’s case, saving $1,000 to invest in her business meant the program provided an additional $4,000 for start-up and operating costs.
The result was a thriving downtown business. All this was possible because of Carol’s careful planning and money management. Carol took a five-week class, My Money Works: Tools for Smart Money Choices, to help her structure her savings goals for the FDA program and develop long-range plans for her personal finances. The class, combined with her business planning, put Carol in a strong position to make her case for financing and to manage her money successfully.
The bottom line is that you can make something from nothing. Self-employment can provide a pathway out of poverty and toward economic security. By building income and assets one small step at a time, you can make a better financial future for yourself and your business.
Erica Quin-Easter is Microenterprise Coordinator for Women, Work, and Community in Aroostook County. The five-week class My Money Works: Tools for Smart Money Choices can help you improve your personal finances and build assets, putting you in a stronger position to leverage financing and access credit for yourself and your business. Classes start Feb. 25 in Presque Isle, March 4 in Biddeford, April 23 in Bangor, April 24 in Lewiston, April 30 in Belfast, and May 1 in Machias. To register for classes, or for more information on statewide programs and services, visit www.womenworkandcommunity.org or call 1-800-442-2092.