10 Best Loan and Grant Options for Starting a New Business in Michigan
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You can obtain loan financing from banks, credit unions, and nonprofits. If loans are not working for you, you can go for grants which represent free money, as they are not repayable.
Application for financing requires precise preparation to avoid declines. As such, you need to improve your credit score, have a comprehensive business plan, and raise the business revenues.
Summary of the Best Loan and Grant Options for Starting a New Business in Michigan
Detroit Community Loan Fund (DCLF)
DCLF provides loans to minorities and women business owners with a history of underfunding. Loan amounts range between $5,000 to $50,000 at a flat rate of 7%. Such loans are available for businesses to start up and expand, purchase materials, and working capital.
Opportunity Resource Fund
Opportunity resource Fund loans are available for starting or expanding a business. To qualify for the loan, your business must contribute to the employment of low-income individuals, and you must provide security.
If your loan is under $150,000, you require a 10 % down payment, while loans above $150,000 require a 15% down payment. The average term is five years, and the loan ranges between $25,000 to $250,000.
Invest Detroit is a group of like-minded local organizations and other entities to help struggling businesses qualify for financing. The loans on offer range between $50,000 to $2.5 million. You also get a chance for training and mentorship, including assistance with formulating a business plan.
Chemical Bank provides SBA business loans that have flexible terms and low-interest rates. In addition, SBA loans enjoy government guarantees hence no security, and are suitable for start-ups with no history and might not qualify for conventional loans elsewhere.
Apart from SBA loans, Chemical Bank offers LCs, real estate, equipment loans, and other business loans.
Michigan First Credit union
Credit unions are either nonprofits or cooperatives which are member and community-based, which presents less stringent conditions for loan qualifications. At the credit union, the available loans are SBA loans, US Department of Agriculture (USDA) together with conventional loans.
Fundbox is an online loan facility that provides a line of credit up to $100,000. With a credit score of 500 and easy-to-meet loan requirements, Fundbox is a popular choice for business people. The processing is quick, and approval is instant.
Federal Business Grants for Small Business
The top federal grants for small businesses are Small Business Innovation Research program (SBIR) and Small Business Technology Transfer Program (STTR). Both provide similar goals of furthering technological innovations through grants that cover the expenses of research.
The minimum grant is $25,000, whereas the maximum is $250,000, but you can go up to $1 Million if your business permits. The difference between SBIR and STTR is that STTR requires the borrower to collaborate with an institution of research.
South East Michigan Resilience Fund
The South East Michigan grant program gives out small business grants ranging from $50,000 to $300,000 meant for businesses working on stormwater infrastructure and restoring unique areas of interest.
USDA Rural Business Development Grants
USDA provides grants of between $10,000 and $500,000 to those running their businesses in rural areas. However, USDA restricts the application of funds to projects that helps your rural area or town.
Minority Business Development Agency (MBDA)
MBDA provides grants to centers that carry out consulting and financial assistance for minority-owned entities.
Starting a new business can be stressful, especially if you lack the cash to get going. Furthermore, not all financing programs are equally effective at helping small business owners achieve their goals.
However, there exist the best loan and grant options for starting a new business in Michigan that can make financing your start-up a little easier. You can strike these options if you research well and prepare your business for suitable financing options.
Before you start applying for a start-up loan, it is essential to thoroughly investigate your funding options before diving right in and applying for the first grant or loan that comes along. That way, you can get a clear idea of how much money you will need to kick start your business.