The government provides a number of programs that help entrepreneurs obtain growth capital and startup funds for your business. From the popular Small Business Administration offers to the more complex Markets Tax Credit, these opportunities provide access to financing opportunities given to small business owners and aggressive entrepreneurs. Here are the top three government funding sources that every entrepreneur should know about.
The SBA Loan Program
The SBA’s loan program is the biggest government backed financing program for small business owners and entrepreneurs. The program encourages leaders to work with firms that they consider risky. The SBA doesn’t really make the loans. They only guarantee a part of the loans made to businessmen from financial institutions. Depending on loan size, the SBA can guarantee 75 to 85 percent of the total amount. The 7a program can finance up to five million, which can be used for long term capital, equipment purchase or purchase a business.
New Markets Tax Credits
The NMTC program is designed to encourage investments in low income locations. Investments get a total of 39 percent tax credit in a period of seven years. NMTC funds are generally used for real estate, with about 82 percent used in this industry. Using the NMTC, entrepreneurs can build or renovate physical locations such as warehouses, retail locations, office space and manufacturing facilities.
Community Development Financial Institutions
CDFIs are institutions which support economic growth of low income communities. Credit unions, venture funds, and banks may be certified with this program and then use these funds to invest in real estate or business, offer financial services in low income communities and generate consumer loans. The availability of CDFI financing depends on the geographical location of the business. Some of the metropolitan areas that exhibit the most CDFI activities include New Orleans, Milwaukee, Memphis, Austin, Bronx, Durham, Nashville, Spokane and Modesto.