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Ads on TV and in your e-mail inbox claim there is free money out there waiting for entrepreneurs. Follow the flow chart to find out if this is true for you.
Can I get a grant to start my business? Infographic by Dakotafire Media / www.dakotafire.net. Click on graphic to see a larger version. A text version of the graphic is below.
Are you incorporated as a nonprofit?
YES: Grants are available for a variety of nonprofit goals, and it’s possible that your small business idea could also work as a nonprofit (you’d still get a salary, but any profit would go back into the organization). The Foundation Center (foundationcenter.org) is the best source for information on grants, but getting that requires a subscription. Fortunately, you can connect to that resource through state libraries. Go to this page to find the library near you with Foundation Center info: foundationcenter.org/collections/
NO: Grants from foundations don’t typically go to for-profit businesses. Go to next question.
Is your business ag-based?
YES: In North Dakota, the Ag Product Utilization Commission offers four grants with the purpose of creating “wealth and jobs through the development of new and expanded uses of North Dakotas agricultural products.” For more info, go to www.business.nd.gov/businessInformation/apuc/
In South Dakota, the Value-Added Ag Subfund provides funding for finding niche markets, doing marketing and feasibility studies, and bringing together people, capital and labor. For more info, go to www.sdreadytowork.com.
NO: Go to next question.
Is your business technology based?
YES: The Small Business Innovation Research (SBIR) program is a federal program provides funding for small businesses to do competitive research for specific technologies that federal agencies are looking for. Go to http://www.sbir.gov/solicitations to see requests that are open now.
NO: Go to next question.
Is your business a child care facility?
YES: North Dakota Child Care Resource & Referral has $800 available for newly licensed, family/group child care providers in North Dakota. Go to www.ndchildcare.org/providers/growing-childcare-nd/grants-initiatives.html
NO: Go to next question.
Are you a member of a tribe?
YES: Many tribes offer incentives for small businesses or entrepreneurs. Check with your tribe to see what they may offer.
NO: Go to next question.
Are you willing to save some of your own money?
YES: Individual Development Accounts (IDAs) provide a way for people with limited income to save to meet their goals, which can include starting a business. Individuals need to have an income of no more than 200 percent of federal poverty guidelines.
In North Dakota, savings (up to $2,000) are matched 2:1; go to the Red River Valley Community Action website.
In South Dakota, savings (up to $2,000) are matched 3:1; there is a waiting list for the program in northeast South Dakota. E-mail nesdcap@nesdcap.org for an application.
NO: Go to next question.
Did any of these apply to you?
YES: Great! But you’ll still need some luck and determination, however. The competition is fierce for many of these opportunities. Make sure you give yourself the time to put together a good application.
NO: There is probably not a ride on a free money train waiting for you. Don’t feel bad, though: The vast majority of businesses start without grant funding. Entrepreneurs look to these sources to get their businesses started (they are listed in order of easiest to hardest to access):
- Personal savings
- Friends and family
- Credit cards
- Second mortgages
- Other businesses
- Trade credit
- Commercial bank loans
- Angel investors
- Venture capital
OK, so it looks like I might need a loan. What are some good sources for that?
There are a lot of resources for Dakotans. Here is a good starter list:
- Small Business Adminstration: www.sba.gov/loanprograms
- South Dakota Governor’s Office of Economic Development: www.sdreadytowork.com/financing.aspx
- North Dakota Department of Commerce: www.business.nd.gov/businessInformation/financing-investments/nd-department-of-commerce/
- Bank of North Dakota: http://banknd.nd.gov/lending_services/business_financing_programs/small_business.html
- Planning districts in South Dakota: See a map with contact information for your planning district here (and see below for featured resource)
- Rural Electric Economic Development Fund: www.eastriver.coop/programs/reed/
- South Dakota Prairie Gateway: www.sdprairiegateway.org (Many of the regional partners listed on this site have revolving loan funds.)
FEATURED RESOURCE: NECOG Development Corporation’s Revolving Loan Fund
This loan fund is one of the ways that NECOG (the Northeast Council of Governments) aims to spur economic activity in the rural areas of northeastern South Dakota. By providing capital for new and expanding businesses, NECOG hopes to “encourage businesses and individuals to invest in the future of their local communities and their citizens,” according to their program brochure.
The loan fund is available for the South Dakota counties of Beadle, Brown, Campbell, Day, Edmunds, Faulk, Hand, Marshall, McPherson, Potter, Spink and Walworth. Many types of project costs can be funded, from business acquisitions to new building construction to permanent working capital.
“A typical example is a recent loan we made to Russ Maier Hay Grinding,” explained Rich Galbraith, revolving loan fund manager at NECOG. “This family-owned hay grinding business needed additional financing for upgrading equipment and were not able to secure bank financing. NECOG-DC was able to provide them this funding and additional funding to assist them in their operating needs.”
The NECOG Development Corporation usually requires a participating lender on the project also—a local bank, for example—and their combined monies should fund the majority of the project.
For more information, contact Galbraith at 605-626-2595 or rich@necog.org.
