Four Fundamentals of Financing
1) Estimate the Amount of Funding You Need
To secure financing for your business you will need to determine your budgetary needs. This includes “seed money” to cover the costs of doing business the first months and ongoing essential costs, including fixed (rent, utilities, administrative costs, and insurance), and variable (inventory, shipping and packaging costs, sales commissions, and other costs associated with the direct sale of a product or service). To learn more about this important topic:
2) Determine the Best Source of Funding
Funding for startup and growing businesses often depends on your stage of business and the amount of money you need. Before seeking financial assistance, completing a thorough assessment of your financial situation is critical. Key questions to help with this assessment will prepare you for identifying the type of financing that best fits your needs.
If you do decide to borrow be prepared for the factors the lender will use to evaluate your loan application.
3) Put Together a Business Plan
Most outside financing sources will require a business plan that outlines how and when the funder will be repaid. For help with business planning, including cash flow projections, go to our Plan Your Business section.
4) Get Information About Various Types of Funding
You know how much money you need and the most likely funding source. Now get more information about the types of funding sources:
State of Iowa Financing Options
Iowa helps support business growth through direct financial assistance and tax incentives.
Direct financial assistance is in the form of loans and/or forgivable loans based in part on job creation, capital investment, the ability to meet certain wage standards, quality of employment, and economic benefits for the state and local community. Applications are filed by cities, counties or community colleges on behalf of eligible businesses.
Tax incentives or business tax reductions may help your business take every opportunity to achieve profitability.
A venture capital fund manages money from investors seeking private equity stakes in start-up and small and medium sized ventures with strong growth potential. These investments are typically characterized as high-risk/high-return opportunities.
Angel/Seed Fund Serving Iowa - Angel investors or “angel funds” provide capital for a business start-up, usually in exchange for convertible debt or ownership equity. An increasing number of angel investors organize themselves in networks to share research and to pool their investment capital.
Every county in Iowa is served with at least one revolving loan fund which owners or startups can access and receive funding from.
As you begin your journey of searching for sources of financing and seek to better understand what options are available to you in Iowa, we recommend calling us at 866-537-6052. Our Iowa Business Concierge is well versed in available programs and services to help you finance your business startup or expansion. We can also connect you with others who can help you pull together financial projections and the required paperwork you will need when you go to apply for funding.