Access to Capital (Money!)

Most entrepreneurs need access to capital to start and grow their businesses.

Access to capital is how easy, or how difficult, it is to get money or other resources to start or grow your business. Getting access to capital can be a challenge for anyone. RISE Collaborative wants to make it easier for all entrepreneurs in Southern Virginia to get access to capital. We do this by sharing information at our Rise & Shine meetups, on this website, and in the RISE Collaborative Online Network.

Financial capital includes startup costs and working capital to cover business expenses, including paying yourself.  Entrepreneurs raise financial capital by by bootstrapping (relying on personal and business income to get by), debt financing, or equity financing. There are many options for financing in the United States, but entrepreneurs must be well-prepared with both business and personal financial information when seeking financing. If you need help with business plan development, apply to join the next CO.STARTERS Core Business Bootcamp >

Social capital is “the networks of relationships among people who live and work in a particular society, enabling that society to function effectively.” If you are looking to expand and deepen your business networks in Southern Virginia, search our Resource Compass to find your local Chamber of Commerce and Regional Economic Development Organizations (REDOs). You’re also invited to join an upcoming Rise & Shine Meetup >

Students in the RISE Collegiate Business Plan Competition earn prize funds and grow their networks

Business pitch competitions are a type of event designed to help entrepreneurs gain access to capital. For example, the RISE Collegiate Business Plan Competition hosted in April 2022 at the SOVA Innovation Hub included 5 teams of students who each presented their business idea to a panel of judges. These aspiring entrepreneurs earned financial capital through prize funds thanks to sponsorship from Benchmark Community Bank. The students also gained social capital by networking with each other, judges, sponsors, and mentors.

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Frequently Asked Questions: Financial Capital

I want to finance my business. What are my options?

There are two options available to entrepreneurs seeking to finance their business: borrow funds (debt equity) or sell ownership interest in exchange for capital (equity financing). Either option has advantages and disadvantages. 

Debt equity, or debt financing, includes borrowing money from family, friends, and/or a lending institution. Traditional lenders mainly include banks, credit unions, and other financial institutions that provide loans to small and medium-sized businesses. There are many options for traditional lenders in the United States, Virginia, and Southern Virginia. There is also an increasing number of non-traditional lending options. 

Most traditional lenders require business owners to include a great deal of personal financial information and business financial information, including a business plan if you are launching a new business or expanding an existing business. If you need help developing your business plan, check out our Programs & Events >

Equity financing involves selling a portion of ownership in your business, in exchange for capital. Learn about the types of equity financing at Investopedia >

I want to apply for a business loan. What information do lenders need from me?

likeTraditional lenders include banks, credit unions, and other institutions providing loans to small businesses. Each lender will have a specific list of information they request. Below is a sample list of information you would need to request a business loan.

[ ] Last 3 years of personal tax returns – Be prepared to share copies of your personal tax returns for the prior 3 calendar years. 

[ ] Personal Financial Statement (PFS) – The lender will provide you with their institution’s version of the PFS. The PFS provides the lender with a complete picture of all of your current financial assets and obligations. Be prepared to gather and report current information about the balances of any and all credit cards, cash and savings accounts, real estate and other investments, employment income, debt obligations, etc.

[ ] Business Summary including background/history – Be prepared to provide a 1 or 2 page, typed summary of your business. Include the background of your business and its history so far. Include your experiences and qualifications as the business owner.  Include the purpose of the requested loan funds – how the funds will be spent and repaid. Include links to your business website, LinkedIn profile, and customer reviews. The goal is to clearly communicate the overall value and potential of your business. 

Have you drafted your Business Summary, and want someone to review it? Request a meeting with a Longwood SBDC Consultant >

[ ] Financial projections for the next 2 years – Financial projections may be created in a spreadsheet software (example: Microsoft Excel or Google Sheets). The financial projections include revenue and expenses.  The projections need to realistically demonstrate the business can cover all of its existing financial obligations and the payment for the new loan. Financial projections should clearly communicate the impact of the loan funds on the startup and/or growth of the business. 

If your business is new or expanding into new products or markets…

[ ] Business Plan – The business plan may be created in a word processing software (example: Microsoft Word or Google Docs) or in a more visual format (example: Microsoft PowerPoint, Prezi, Canva, IdeaBuddy, etc.). The business plan includes the business summary and financial projections described above. The business plan may also include your marketing plan, customer profiles, market research, competitor analysis, etc. The goal is to provide the lender (or other investor) with all the necessary information for to make a decision on your funding request. 

Need help developing your business plan? Join the upcoming CO.STARTERS Core Business Bootcamp >

If your business is already operating…

[ ] Last 3 years of business tax returns – If you are a sole proprietor or have been working as a 1099 independent contractor, your business tax returns are included in your personal tax returns. Partnerships and other business types will have separate business tax returns. If you are starting a brand new business, you obviously are not expected to have this yet. 

[ ] Most recent interim financials –  This includes the following four financial reports: Balance Sheet, Profit and Loss Statement, Accounts Receiving, and Accounts Aging.

Do these financial statement names sounds like gobbledygook? Join the upcoming CO.STARTERS Core Business Bootcamp >

In the meantime, ask your Certified Public Accountant (CPA) or bookkeeper for help. Are you taking a doing-it-yourself approach to bookkeeping? Get free consulting and training through the Virginia SBDC and Longwood SBDC >

 

I want to seek equity financing. Where do I start?

Unique Business Financing Resources for Entrepreneurs in Southern Virginia

Virginia Community Capital: Economic Equity Fund

Virginia Community Capital (VCC) is a Community Development Financing Institution (CDFI) with a statewide vision create jobs, enhance the quality of life, and promote vibrant communities in historically excluded markets and regions across Virginia. VCC offers small business loans, including those available through the Economic Equity Fund.

Lake County Development Corporation: Revolving Loan Funds

The Lake Country Development Corporation (LCDC) operates two revolving loan funds to support the establishment of new industries, assistance for existing locally-based industries, innovative and job-creating economic uses and activities, and to fill a gap in the existing local financial market in the Virginia counties of Brunswick, Halifax and Mecklenburg. 

The Launch Place: Pre-Seed & Seed Fund

The Launch Place strives to help entrepreneurs go to the next level. While this next level depends on the entrepreneur, The Launch Place offers two funding opportunities: Pre-Seed Investments for market and product validation and/or business model refinement and the Seed Fund to be a catalyst to specific milestone achievements, such as, follow-on capital, first customers or another significant breakthrough in a start-up’s growth.

Virginia Enterprise Zone Grants

The Virginia Enterprise Zone (VEZ) program is a partnership between state and local government that encourages job creation and private investment. VEZ accomplishes this by designating Enterprise Zones throughout the state and providing two grant-based incentives, the Job Creation Grant (JCG) and the Real Property Investment Grant (RPIG), to qualified investors and job creators within those zones, while the locality provides local incentives.

Tobacco Commission Community and Business Lending (CBL) Program

This program will allow businesses to obtain up-front capital, a need that has been expressed to the Commission over the years, while allowing the Commission to increase the competitiveness of the region’s business climate.

Tobacco Region Opportunity Fund (TROF)

In all circumstances, the Commission favors businesses that are in traded sectors and bring new capital into the Tobacco Region rather than contribute to the velocity of money within the Tobacco Region. In general, this precludes retail and food-service projects, as well as local provision of services and non-competitive projects.

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