Find the funding that best serves your business

Funding decision for startups graphic

Television shows like Shark Tank and The Profit have helped reinvigorate an interest in entrepreneurship in America. They have also perpetuated the misconception that when it comes to financing a new business, venture capital is the only means to launch or grow. The reality is that very few businesses fit the profile required by venture capital firms. In most cases, a small business loan (or debt funding) would serve entrepreneurs better.

In a community that embraces entrepreneurship and loves the adrenaline rush of venture capital, debt funding is often overlooked and sometimes even viewed as a last resort for those who aren’t worthy of venture capital.

In a healthy, stable business ecosystem, both types of capital play a critical role and can often be utilized in concert. They are not, however, interchangeable. At every decision point requiring capital, the structure and source of funding must be seriously evaluated to determine which is best. The answer will lie in the needs of your company and depends upon industry, stage of maturity, liquidity position and ultimate business outcomes.

Venture capital makes sense when you are trying to build a company worth hundreds of millions in a very short time frame, and the company is young without any history of revenue. For mom-and-pop, main street or “lifestyle” businesses, however, venture capital likely isn’t the best funding vehicle. Typically these aren’t businesses looking to scale rapidly and produce the return of 3x investment that venture funds generally target.

Don’t be misled, these businesses can grow to be worth tens of millions of dollars, employee hundreds, and are the backbone of our economy. These are the companies that are passed from one generation to another and build wealth in communities that need economic growth. If there is no history of revenue or profitability in this new business, however, it can be difficult to demonstrate to a traditional debt lender that you can repay a loan!

Maybe you don’t have historical cash flow required for debt-funding, but your cash flow is improving and you don’t want to give away equity in a business you’ve worked hard to bootstrap and grow through venture capital.

As an entrepreneur, where do you turn when you have a business opportunity, but don’t meet the criteria for venture capital or debt funding?

We answer that question every day. Community Development Financial Institutions or CDFI’s like Pathway Lending are a great source for capital and education for small business owners. More than 1,000 CDFI’s across the country provide alternative sources of business growth funding which are often the perfect hybrid of venture capital and debt.

We serve businesses and communities by providing credit, capital and financial services that are often unavailable from mainstream financial institutions. CDFI’s like Pathway take chances on entrepreneurs and don’t require huge equity stakes or burden businesses with high rate of return requirements. A CDFI’s return lies in the community benefit and the growth of our local economy.

In the business jargon which includes words like “Series A,” “convertible,” “multiple,” etc. maybe we need to add a new term – CDFI?

To learn more about the types of capital we offer, visit our Loan Catalogue. For small business resources like Business Plan templates and Breakeven Calculators, visit our Resources You Can Use page.

Ready to apply for a loan from Pathway Lending? Apply now.