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Ask ACE: How do I connect with alternative financing sources?
By Terry Johnson, Practical Decisions
Q: My business is small, and we need cash to fund our expansion. We may not qualify for a traditional loan. How do I connect with alternative financing sources?
ACE advises: Maine small businesses need capital to grow. They may not qualify for traditional financing. They may not be ready to seek outside investors through a private placement memorandum. They need alternative sources of cash.
Maine has a number of public and nonprofit organizations assisting businesses with alternative financing. Until recently, identifying those organizations could be a haphazard process.
The Maine Funding Network was established this year as an online site matching businesses with over 20 state and local organizations that offer grants, loans, investment capital and advice. The process is straightforward.
First, your business creates an account and fills out a common loan application form. This form is analogous to the “common app” used for college admissions, in that a single application connects your business to the Maine Funding Network partner. The Common Loan Application gathers information such as industry, funding goals and location to identify funding matches.
Second, the site uses the information to identify the partner organizations best fitting your business type and goal.
Third, after you have reviewed your funding matches and have identified the best options, click on the names and you will be connected directly with your potential funding partners.
Finally, the funding partners will work with you to collect additional information needed for grants, loans or equity financing. The Maine Funding Network is collaborative. The partner organizations work together with applicants to create funding packages. This is helpful in increasing the total amount of funding available, while facilitating reporting to financing organizations.
The common app process not only saves businesses the legwork of searching for appropriate alternative funders, it saves time filling out applications which may not address a funder’s specific criteria. A single application gets you to the right funders with digital speed.
Terry Johnson, past president of ACE, is a principal of Practical Decisions and manages MCE’s Maine Mentor Network. He can be reached at terry@practicaldecisions.com.
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