3 Online Tools To Find Funding
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Whether you're trying to grow a business or start one, securing the money to do it can be overwhelming. From traditional bank loans to crowdfunding, there are now many options to consider. To determine which ones are best for you, here are three online tools to consider:
1. Intuit’s Loan Finder. Intuit, the financial software-maker headquartered in Mountain View, Calif., offers a free tool to discover funding options and loan experts to help you through the process.
When to use it: If you're not sure what your funding options are or how to prepare an application, consider this tool. Intuit will shop around your online loan application to 450 lenders, from banks to credit unions and micro-lenders to more alternative lending options.
How it works: You submit a loan application and receive an instant “pre-approval” from interested lenders with rates and financing details. Loan amounts range from a few thousand dollars to several million. Once you decide on a lender, you have to submit additional information (think tax returns or financial statements) to officially apply for the loan. Final approval comes within 12 and 45 days.
Be aware: You have to at least submit basic financial information before you will get any response as to what kind of loan you are eligible for.
2. Multifunding’s Banking Grades. The Broad Axe, Pa.-based business loan advisory firm, Multifunding, offers a free online tool that grades banks based on their small business lending. It calculates the percentage of a bank’s deposits that are going to small businesses. As guidance, Multifunding labels any loan less than $1 million as one that is likely going to a small business. To get an “A,” a bank has to use 25 percent or more of its domestic deposits to make loans to small businesses: there are 2,693 banks that have an “A” grade.
When to use it: If you're set on applying for a traditional bank loan, this tool can help you identify a bank that has a track record of lending to small businesses.
How it works: You can search for banks by zip code. Other than Texas and California, banks in the midwest reign supreme in small business lending: Minnesota, Iowa, Illinois, Missouri, Nebraska, Wisconsin, Kansas and Oklahoma were eight of the top ten states, ranked for having the most “A” banks.
Be aware: Multifunding's grading system is determined by the percentage of a banks' total deposits that go to small businesses. Because of the volume of deposits that they hold, the nation's largest banks are not predisposed to rank well on this list.
3. SoMoLend. This Web-based service matches entrepreneurs with investors in the same geographic area. SoMoLend, headquartered in Cincinnati, Ohio, targets small, upstart companies with up to 15 employees that are seeking loans between $100 to $1 million. Investors on SoMoLend run the gamut from banks to individuals. What's different about these investors is they are focused on businesses in their own communities.
When to use it: If your existing business has a dedicated fanbase in your community, or you primarily serve customers in your neighborhood, this option may suit you.
How It Works: You have to complete an application, including financial information (both personal and business). SoMoLend then ranks your company based on risk – a rating of one to five stars – so investors can weigh their options. Risk is based on your personal credit score, your time in business and with managerial experience, and the amount of debt your company has as a percentage of income. Investors use a GPS location tracking system to identify businesses that are seeking funding nearby with SoMoLend.
Be aware: You'll have to submit a lot of financials upfront, including personal tax information, credit score, business taxes, a profit and loss statement, and a valid Employer Identification Number. After that, you'll find out if you've been pre-approved for a loan. If you decide to accept a loan, SoMoLend charges a 2-percent fee.
Related: 3 Rules for Successful Crowdfunding
Readers, what is the best resource you have used to find funding?