Methods of Financing

SBA – The U. S. Small Business Administration (SBA) is a primary source of financing for small businesses. One of its primary goals is to protect the interests of small businesses by providing loan guarantee programs.  SBA provides a number of financial assistance programs for small businesses that have been specifically designed to meet key financing needs, including debt financing, surety bonds, and equity financing. The 7(a) Loan Program is SBA’s most common loan program and has a maximum loan of $5 million. The 7(a) loan program, for example, can be used for a number of purposes including working capital, revolving funds, equipment purchases, refinance existing debt and more.  SBA also offers export-assistance loans as well as financing for seasonal working capital (CAPLine) or major fixed-assets such as equipment of real estate (CDC/504 loans).  If you are looking for smaller loan amounts (under $50,000), consider the Microloan program.  A business must be engaged in an activity SBA determines as acceptable for financial assistance from a federal provider.

SBA does not make direct loans to small businesses. Rather, SBA sets the guidelines for loans, which are then made by its partners (lenders, community development organizations, and micro lending institutions). The SBA guarantees that these loans will be repaid, thus eliminating some of the risk to the lending partners. So when a business applies for an SBA loan, it is actually applying for a commercial loan, structured according to SBA requirements with an SBA guaranty. SBA loan guaranty requirements and practices can change as the Government alters its fiscal policy and priorities to meet current economic conditions. Therefore, you can’t rely on past policy when seeking assistance in today’s market.

To be considered for an SBA loan, first apply at a local financial institution.

SBA 504 Loan Program – The SBA 504 loan program can provide financing at a low interest rate that is fixed for 20 years for up to 40% of your project costs and require as little as a 10% down payment.  The SBA 504 program is a financing tool for most small businesses that are for profit and will occupy the majority of the building that will be financed with the loan. Business owners that need financing to buy property, make improvements to an existing property, build a building or purchase capital equipment should consider the SBA 504 loan program.  For more information, go to, SBA Loan Programs, Real Estate & Equipment Loans: CDC/504 Loan Program or contact the Enterprise Development Corporation, Columbia, MO (

Enterprise Development Corporation is a not-for-profit Certified Development Corporation (CDC) financing the growth of small businesses in Missouri through 504 loans.   The SBA 504 program from Enterprise Development can provide up to 40% of a project’s financing with the participating lender providing up to 50%.  Depending on the details, the borrower is responsible for a minimum of 10%. For start-up businesses or those in operation for less than two years, the maximum participation is 35%, while the participating lender and the borrower contribute the balance.  If real estate is involved in the project that is special-purpose in nature, the SBA 504 loan will be reduced by 5%.  Historically, the average size of an SBA 504 loan through Enterprise Development is around $500,000.  The minimum loan amount is $65,000 and the maximum loan amount is $5 million ($5.5 million for Public Policy Goal projects).  504 Video Presentation

Enterprise Development Corporation
910 E. Broadway, Ste. 201
(573) 875-8117
Columbia, MO 65201

RMI is a Certified Development Company (CDC). Working with a lender, RMI provides up to 40% of the financing for the purchase of existing commercial real estate or new construction and equipment.  The 504 Loan Program provides long-term, fixed-rate financing with low down payments to businesses. These loans are used to acquire real estate, machinery or equipment for expansion or modernization. Projects range: $120,000 to $10 million.

A typical project includes a loan from a bank or non-bank lender with secured senior lien; a 504 loan from RMI secured with a junior lien covering up to 40% of the total project cost; a contribution of at least 10% from the borrower. The 504 Loan Program is designed for start-ups and existing businesses, for-profit businesses, and owner-occupied businesses.

3324 Emerald Lane
Jefferson City, MO 65109
(573) 635-0136

Microloans – Microloans are usually provided by community-based, nonprofit micro-finance institutions that want to help people like you start or grow a business.  The SBA Microloan program provides very small loans to startups, newly established or growing small business. For a microloan contact the Justine Petersen organization ( or Central Missouri Community Action (CMCA) (  in Columbia, MO.

USDA Rural Development – Through its business programs, the USDA Rural Development provides loans for business and industry often in partnership with private-sector lenders.  Loan purposes include construction, renovation, purchase land and buildings, purchase machinery and equipment, startup costs and working capital.  Business and industry loans are normally available in rural areas which include all areas other than cities or towns of more than 50,000 people and the urbanized area contiguous and adjacent to those cities or town.

Missouri Small Business Loan Program – The Missouri Department of Economic Development working with the Missouri Development Finance Board have a pool of funds for low-interest or no-interest direct loans for small businesses. Information can be found at:

Personal, Friends and Family
Using personal savings or borrowing money from the equity you have built in your home are the more effortless and inexpensive ways to obtain funding for your business.  You will want to take into consideration how using your savings or home equity impacts your personal financial security.   Money borrowed from relatives and friends can sometimes be another easy source of funding. This source of funding is obtained through close personal relationships.  You should establish a clear understanding of the risk associated with the investment, as well as repayment expectations for loans.

Although Crowdfunding, or the ability of a community of supporters to help fund or give resources to build an idea, is not new the internet and the social layer built upon it have enabled a surge of projects that are funded by friends and future customers of the business. Typically a project is created online complete with video and ‘rewards’ in the form of product or special services that are given to supporters who donate funds to a campaign.

Crowdfunding as a form of financing a venture is a great fit when the idea is unique, reaches a particularly passionate audience, or within the context of testing the validity of an idea. It takes a lot of work to organize, promote, run, and then follow up on a crowdfunding campaign.

There have been numerous successful campaigns in the mid-Missouri region including: Ragtag Cinema Gunter Haus, Vonnie D’s Pinball, Pizza Tree, Encircle Technologies, Stadium Shoes, Belle Bash, and Soul Seat – they were able to tap into a community, fund their idea, and have a great start or boost to their business.  Although most of these projects were on Kickstarter or IndieGoGo there are many platforms with their own community and rules that you should assess before making a decision.

Kickstarter –

Indiegogo –

Gofundme –

Crowdrise –