Do you need to finance your small business in Salem?
Regardless of the type of business you have or the industry you operate in, at some point you’ll need funding. It’s important to understand what kind of financing options are available to you and how to decide which is best for your business.
In this beginner’s guide, we outline how to evaluate different financing options and what those options are. We also provide some advice on how to navigate the application process to secure your funding.
After reading this guide you’ll have a much better idea of which path to take to financing your small business!
Securing the Right Type of Funding
The type of funding you choose will have a big impact on the long-term success of your small business in Salem, Oregon. It doesn’t matter if you’re launching a tech startup or looking to expand your restaurant to a second location, choosing the right type of funding is critical.
The right funding empowers you to make strategic moves, manage the ups and downs of business, and ultimately grow without unnecessary financial stress.
On the other hand…
The wrong type of funding for your small business can put strain on your cash flow, limit your flexibility, or force you into unfavorable terms
The key is aligning your funding choice with your goals. Are you planning to scale quickly, or are you looking to keep operations steady and sustainable? Securing the right mix of capital allows you to make smart decisions that fuel your business in both the short and long term.
Here are some things to keep in mind to help you choose the right type of funding for your business:
- Understand your business stage. Is your business a startup or an established business looking to expand? If you’re just starting out, grants and loans might be the best option for you. Lines of credit or equity financing might make more sense if your business is already established.
- Determine your financial needs. What do you need funds for? To increase your marketing efforts, enter new markets, or launch a new product? Answering these questions will help you decide between options like loans, crowdfunding, or investors.
- Balance control and debt. If you want to keep full ownership of your business, loans and grants would be best. Equity financing could be your best option if you don’t mind giving up some ownership control of your business.
- Assess your risk tolerance. Loans need to be paid back – often with interest. If that’s not a risk you want to take on, look for grants that don’t need to be paid back or consider private investment.
Funding Options
When it comes to financing your small business in Salem, Oregon, you have a number of options.
Small Business Administration
The U.S. Small Business Administration backs loans provided through third-party lenders like banks, credit unions, and other financial institutions. Because they’re backed by the federal government, they’re less risky for lenders and are easier for small businesses to acquire.
The most common SBA loans available for borrowers are 7(a) loans, 504 loans, and microloans.
In Salem, you can apply for SBA loans through local banks or the Small Business Development Center (SBDC). For a full list of SBA lenders in Oregon, make sure to check out the organization’s Lender List.
Traditional Bank Loans
Traditional bank loans are a common source of funding for small businesses here in Salem. Local banks and credit unions in Salem offer a range of loan products tailored to business needs. These loans typically require collateral, a solid credit history, and a detailed business plan.
Venture Capital
If you’re willing to give up some ownership of your business, you may want to consider venture capital from private equity firms or angel investors.
Venture capital is a great option if your small business has a high potential for growth. You’ll need to find potential investors and pitch them on your business. They’ll carefully review your team, market, product or service, and financials.
Venture capital doesn’t need to be paid back like traditional loans, but as we’ve mentioned, you’ll be exchanging equity for funds. The big advantage is that it allows you to rapidly expand your business without taking on debt.
Here’s a list of some venture capital funds in Oregon you can consider:
Business Oregon
Business Oregon, the state's economic development agency, offers crucial resources for small businesses in Salem and throughout the state. The organization’s mission is to support business growth and innovation, which it does through grants, loans, tax incentives, and other programs.
Below are some of Business Oregon’s most notable programs for small businesses:
- Small Business Innovation Research (SBIR) & Small Business Technology Transfer (STTR) Programs - If your small business is in an industry like technology, science, or manufacturing, these programs could help you secure the funds you need to thrive. Designed to support innovative small businesses working on cutting-edge research and development projects, these programs provide matching funds for federal grants.
- Rural Opportunity Initiative (ROI) - This program focuses on empowering entrepreneurs and small businesses in less populated areas, offering not only financial support but also mentorship and technical assistance. With a community-driven approach, the program helps ensure that businesses outside of urban hubs like Portland can still access the resources they need to succeed.
- Oregon Business Development Fund (OBDF) - A revolving loan program offering fixed-rate, long-term financing for land, buildings, equipment, machinery, and permanent working capital. It’s designed to complement traditional lending sources and applicants must typically be "traded sector businesses" in manufacturing, processing, or distribution.
- Entrepreneurial Development Loan Fund (EDLF) - If your small business in Salem does not qualify for traditional bank loans, the EDLF could be a good option to help you secure your growth. The program offers direct loans aimed at supporting start-ups, micro-enterprises, and small businesses in Oregon, helping them establish or grow.
The programs above are only a few of the more than 80 programs available for Oregon businesses. Make sure to check out Business Oregon’s program page for the full list of available programs.
Navigating the Application Process
Securing funding for your small business may seem like a daunting task. But as long as you’re prepared it’s more than manageable. Here’s some advice for you as you prepare to apply for funding:
Prepare a Detailed Business Plan
A solid business plan is your key to securing funding. Investors and lenders will want to see a clear outline of your business’s goals, strategies, market analysis, and financial projections.
Be sure to include details like your target audience, competitive analysis, and growth strategy. Your business plan needs to not only communicate your vision, but also show potential investors that you’ve thought through potential challenges and opportunities.
Visit a Resource Center
You don’t need to navigate the application process alone! There are resources in place that you can take advantage of to help finance your small business. For example, the Chemeketa Small Business Development Center provides consulting services in areas like business plan review and financing. You can also reach out to SCORE for free business mentoring and resources.
Keep Your Finances Organized
It’s essential that you keep your finances organized. Investors and lenders will dig deep into your finances, looking at things like balance sheets, cash flow statements, and financial forecasts.
Clear and organized finances not only makes the funding process easier, but also helps you set your small business up for long-term success.
Finance Your Small Business With Valley Credit Union
There are plenty of options to finance your small business in Salem. Hopefully you now have a clearer idea of how to choose the best option to secure funding for your business and how to go about doing it.
Remember to make the most of local resources to help your secure financing. Being an entrepreneur is a hard road to walk and you don’t need to walk it alone.
Don’t hesitate to reach out to VCU for more information or to apply for a business loan. As a local credit union in Salem we can provide the support you need to finance your small business.
About the Author
Justin Roberts, Vice President of Lending
Justin Roberts is our Vice President of Lending and has been in the financial industry for over 18 years. He is an Oregon State University Graduate and has just completed Western CUNA Management School. When he is not focused on helping the members at Valley, you will find him coaching his two sons and volunteering his time to help develop the youth in our communities through sports.