Many small businesses can’t qualify for a small business loan from a traditional local bank. A bad credit record disqualifies many. Lending standards have tightened. Some small towns are limited by local banks that don’t support small business; others don’t have locally-owned banks any more. The good news is that alternatives are available. We’ll be profiling alternatives to traditional small business loans in this ongoing series on financing. This week: local loan funds.
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| Local businesses in Momence, Illinois, used a local revolving loan fund to renovate their historic buildings. Photo by USDAgov. |
Local loan funds are targeted by geographic area. Basically, you have to be located in the right area to get one.
When we profiled our first alternative small business loans, Chatham County (North Carolina) Economic Development Corporation replied on Twitter that they have their own local program, the Chatham Loan Fund. [@ChathamEDC] In my area of Oklahoma, small businesses can look to Northwestern Electric Cooperative’s Economic Development Loan fund.
Many local programs like this were funded through USDA Rural Economic Development Loan and Grant programs.
How do you find these in your area? You have to search, sometimes relentlessly. Look at your local economic development groups and committees. Check with your Chamber of Commerce. Ask your utilities, especially rural cooperatives. And remember to look at neighboring bigger towns; they may cover your area, too.
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