Entrepreneur's Corner: Economic Incentive Grants & Loans--How to Be Prepared
By Jane Burroughs, VP of Operations
In the process of growing a successful business, most companies end up seeking capital at one time or another. Part of what we do at the Entrepreneurial Development Center (EDC), is help our clients understand what funding options are available, and make the most sense for their business. We also help our clients get “polished” in order to present their business to potential funders, be it bank, government programs or equity investors.
As your company seeks funding assistance, particularly grants or forgivable/low interest loans from city, county, state and federal sources, it’s important to be prepared. For example, many business owners do not realize that most programs require a local financial match. Many sources also expect the business owner to be financially committed to the business, or have “skin in the game”.
In fact, the state prefers to be one of the last components of your business’ financing, following personal or bank money, for example. Federal funds, Venture Capital investments or Angel Investors can be used as matching funds. However funds spent prior to receiving the award cannot be used as matching funds.
Yes, you’ll need a business plan or at least an executive summary. But you’ll also need to have your financials in good order. This includes past and current financials (profit / loss statements and balance sheets), and projected revenue for the project / business endeavor.
For clients seeking funding via state funds such as Demonstration Fund and EVA, the company must be engaged and recommended by an Iowa Business Accelerator, such as the Entrepreneurial Development Center. The first step for any of the funding programs through the Iowa Department of Economic Development (IDED) is filling out a Project Review Form, something the EDC assists clients with on a regular basis. Applications from companies are judged in terms of marketability, return on investment and economic development impact (including things like employee head count, potential salaries, and benefits).
While the EDC assists its clients with understanding their eligibility options, refining their business models and plans, as well as the paperwork involved with applying to the state programs, funding approval is ultimately up to the IDED director or board of directors.
Applications can be submitted to the state at any time. Once submitted, IDED takes all documents through a rigorous due diligence process. It can take 1-3 months to receive notification of award and another 6 weeks, in some cases, to complete the contract process.
For a list of tips for accessing specific types of funding, visit www.edcinc.org and download a copy of our Resource Guide from the Resources tab.
In addition to assisting clients with their operations needs, my role at the EDC is also to help our interstate commerce clients determine and navigate the best funding options for their business. We believe that the more locally headquartered companies in our community that receive the support they need to prosper, the more viable our community’s economic vitality will be for years to come. Contact me at the EDC (319-369-4955 or jburroughs@edcinc.org) if you are considering funding options for scaling your business.
