Skip to Main Content
In observance of MLK Day, we will be closed on Mon., Jan. 18. We'll continue serving customers via drive-thru/appointment on Tues., Jan. 19.Click here for COVID-19 resources and operational updates.

Town and Country Bank

Main Navigation

  • Careers
  • Contact
  • Search
  • Login
    • Online Banking
        • Forgot Password
        • Sign Up
    • Home Loan
    • Make a Mortgage Payment
    • Trust & Investment Services
    • Make a Loan Payment
    • Credit Card
  • Menu
  • Home
  • Personal Banking
    • Personal Checking Accounts
    • Personal Savings Accounts
    • Loans
      • Auto Loans
      • Personal Loans
      • Home Equity
      • Land & Lot Loans
      • Bridge Loans
    • Make a Loan Payment
    • Personal Debit and Credit Cards
  • Business Banking
    • Business Lending
    • Business Accounts
    • Treasury Management
    • Business Debit and Credit Cards
    • Meet Our Business Bankers
    • SBA Paycheck Protection Program (PPP)
      • SBA Paycheck Protection Program (PPP) Loan Forgiveness
  • Home Loans
    • Find the Perfect Home Loan
    • Meet our Mortgage Lenders
    • Apply for a Home Loan
    • Mortgage Calculators and Rates
    • Make a Mortgage Payment
    • Mortgage FAQs
  • Trust & Investments
    • Personal Financial Planning Services
    • Business Financial Planning Services
    • Meet our Trust & Investments Team
  • Customer Support
    • Online & Mobile Banking Services
    • Account Resources
      • Overdraft Protection
      • Reorder Checks
      • Financial Calculators
      • Switch to Us
      • Online Forms
      • Online Security
      • FAQs
    • Additional Services
  • Sprig The Word Blog
  • Our Team
  • About Us
    • Community Support Request
    • About Our Bank
    • Diversity, Equity, and Inclusion
    • Locations & Hours
    • Careers
      • Careers in Mortgage Lending
    • News
      • 2020 Financial Reports
      • 2019 Financial Reports
      • 2018 Financial Reports
      • 2017 Financial Reports
    • Contact Us

  • Sprig The Word Blog

Guide to Start-Up Financing for Illinois Small Businesses

9/15/2020

SHARE

Have you ever wondered how your favorite local business got started? One thing all successful start-ups have in common is business capital. Whether you are self-funded, borrow money from friends and family, or receive a loan, all businesses need money to launch. Unfortunately, of the new businesses that fail during their first two years, insufficient funding is one of the top reasons.

In this article, we’ll help you get off on the right financial foot with a list of start-up funding options, from grants and angel investors to more traditional loans.

Acquiring funding is the first step towward starting your small business.

Before You Begin: Write a Business Plan

This is probably the most important part of the start-up process. Writing a business plan is an exercise that will help prepare you for and guide you through the business start-up process. Among many other important details, this process will help you determine what your costs will be to start your business, budget for that process, and avoid surprise expenditures. Covering those costs in advance is much better than dealing with them as they arise, during a time when most start-ups are not producing enough revenue to cover surprise expenses. Many helpful guides and templates exist on the Internet, such as this one here.

Self-Funding

While it may not be realistic for everyone, many entrepreneurs use personal savings and credit lines to finance a new business. That could mean dipping into your 401(k) or IRA retirement accounts, using a personal credit card, or tapping other cash reserves.

Borrow from family or friends

Next to self-funding, your personal network may be a good source of funding for your new business. Of course, mixing money and personal relationships can be tricky. Be clear about whether you’re asking for a loan or an equity investment and make sure you use an attorney to draft the paperwork and set the terms of the loan.

Before you ask for help, prepare a detailed business plan with financial projections and other data that shows you’re taking your new business (and their money) seriously. Be clear about the risk involved, especially with an equity stake.

Crowdfunding

If you already have a following on social media, you could use that platform to generate a specific amount of money through pledges. If not, it could be hard to gain traction and visibility for your project. For context, less than half of all Kickstarter campaigns reach their target number.

If you do go the crowdfunding route, review the various sites such as Kickstarter, Indiegogo, and GoFundMe to find the best fit for your niche. You’ll need to figure out what kinds of gifts or other incentives you can offer to people who pledge. And you’ll definitely want to invest time in creating a compelling story and high-quality visuals to share.

Many startup founders don't have capital.

Grants

Unlike a loan, a grant doesn’t need to be repaid. Business start-up grants tend to be on the smaller side, so don’t expect a grant to provide all the funding you need. However, it can be a helpful boost as well as a way to connect with other entrepreneurs and organizations.

Grant programs are usually tailored to specific niches, whether the type of business, location, race or gender of the business owner, and more. To apply for a grant, you’ll need to write a proposal. Professional grant writers can always be hired to help if you need it.

Looking for small business grants? Check out this list of SBA-associated award programs.

Angel Investors

This is another alternative to loans. If you’ve ever watched the show “Shark Tank,” you’re probably familiar with angel investors, who buy a share of ownership in your company through equity investments.

Hoping to connect with an angel investor for your business? The SBA maintains a network of SBA-licensed Small Business Investment Companies (SBICs).

Building a network can be extremely beneficial.

Small Business Lending

Now that we’ve looked at alternatives to small business loans, let’s review the most common types of small business financing.

Personal loans

A personal loan is a type of unsecured financing that can be used for a variety of purposes, including business funding. You’ll need a good credit score and debt-to-income ratio to qualify. Loan limits and terms vary.

Bank Loans for Businesses

If you already have a business checking or savings account, you’re on your way to building a lifelong relationship with your business banker. This will come in handy when it’s time to borrow money. Community banks like Town and Country Bank and Peoples Prosperity Bank are known for their willingness to lend to smaller businesses and entrepreneurs when bigger banks necessarily won’t.

Bank loans for businesses include:

  • Business Term Loans: Can be used for a wide range of business needs
  • Equipment Loans and Leasing: Purchase new or used equipment such as machinery, computers, and more.
  • Commercial Real Estate Loans: Purchase, build, or refinance a commercial property.
  • Agricultural Loans: Agricultural production lines of credit and farm real estate loans
  • Home Equity Loans: Use the equity in your house to finance your business and/or refinance higher-interest business debt.

Banks also serve as SBA loan lenders, which we’ll cover next. As a Preferred SBA Lender, we can offer qualified companies our best rates and extended terms for a variety of business needs.

Small Business Administration (SBA) Loans

The SBA makes it easier for small businesses to access financing by serving as a guarantor for a portion of the loan. This enables community bank lenders to provide flexible terms and competitive rates. The two primary types of SBA loans are:

  • 7(a) loans: These “working capital” loans come in a variety of amounts and can be used for just about anything related to your business.
  • 504 Loans: Fixed-rate financing most often used for owner-occupied commercial real estate but may also cover heavy equipment and assets used to modernize or expand your business.

The Illinois Small Business Development Center (ISBDC)

This free service is provided in connection with the SBA. Locations are available in many communities for anyone who wants to start a business but isn’t sure where to begin. Our local ISBDC rep in the Greater Springfield area is Kevin Lust who does a great job working with entrepreneurs.

Town and Country Bank and Peoples Prosperity Bank can help!

Town and Country Bank and Peoples Prosperity Bank has a rich history of investing in Illinois small businesses in communities throughout Central Illinois and the Metro East. Let us help you get your first business started! We offer a full range of business banking services including various accounts, lending options, treasury management services, and more. Check out our other blog articles for entrepreneurs:

  • “Tips For Starting Your First Business”
  • “Marketing Tips To Get Your Small Business Noticed”
  • “The Small Business Guide To Merchant Payment Options”
  • “SBA Loans: Everything You Need To Know To Start The Application Process”

Request a business financial review with one of our experienced business bankers or contact us today to learn more about business financing options!

Speak with a lender.

More Posts

View Current Offers
Open an account
Find a location

  • Facebook Logo
  • Twitter Logo
  • LinkedIn Logo
  • Contact Us
  • Locations & Hours
  • Financial Calculators
  • Careers
  • Financial Privacy Disclosure
  • Financial Privacy Opt Out Form
  • Other Disclosures
  • Community Support Request
  • Routing Number: 071123262
  • FDIC Logo
  • Equal Housing Lender Logo

Copyright © 2020 Town and Country Bank All Rights Reserved. An Illinois State chartered banking organization. | Please note that Investments are not a deposit, not FDIC Insured, not insured by any federal government agency, not guaranteed by the bank and may go down in value.

Privacy Policy

Town and Country Bank is regulated by the Federal Reserve Bank of Chicago. For accolades or complaints, please contact us by sending a letter to: Customer Relations Office, 3601 Wabash Ave., Springfield, Illinois 62711. If there is no sensitive customer information, such as social security or account numbers, you can send feedback to the following email address: customerrelations@townandcountrybank.com

You Are Now Leaving

You are now leaving the Town and Country Bank/Peoples Prosperity Bank website. You are about to access a third party web site or service that is not owned or controlled by Town and Country Bank/Peoples Prosperity Bank and therefore, may not be FDIC insured.

While we believe these resources are reliable, Town and Country Bank/Peoples Prosperity Bank is not responsible for and will not guarantee the products, services, information, or content provided by this third party.

Continue Cancel ×