Show me the money! Finding the right funding for your new or growing business.

If you missed the funding topic at the February 11th Imagination Network meeting (an inventors and entrepreneurs club in the Fond du Lac, WI area), you’re in luck.  A summary of the key traditional and non-traditional funding sources presented by the following panel of experts is outlined below.

The panelists included:

  • Tammie Clendenning, Economic Development Specialist/SBDC Project Officer from the Small Business Administration (SBA)
  • Kathy Doyle, Business Development Director, ADVOCAP
  • Bill Steimel, Director of Business Development, Fond du Lac County Economic Development Corporation
  • Randy Melzer, SCORE volunteer
  • Elizabeth Hartman, Fund Administrator, Angels on the Water, LLC

Traditional Funding Sources through Debt Financing

Traditional funding sources or creditors lend money to small businesses with the promise that the principal and interest on the debt will be repaid.  Common traditional funding sources include SBA loans, microloans and revolving loan funds.

SBA Loans

According to SBA’s Economic Development Specialist from Milwaukee, Tammie Clendenning, “while SBA loans fund as much as $5,000,000, currently there are no guarantee fees* associated with loans up to $150,000 making access to capital attainable for most small businesses. There are specialty programs available for Veterans, exporting, and working capital.”

Nearly all for-profit businesses are qualifying business types for an SBA loan.  The general guide is <500 employees for manufacturing, <100 employees in wholesale business, <$7 million in retail and < $4.5 million in services with a few exceptions. SBA loans can be for any legitimate business purpose including machinery and equipment (10 year term or useful life), real estate (25 year term), working capital inventory (7 year term) and refinancing of existing debt.  A business can apply through their bank or ADVOCAP.  For more information about SBA loans, check out the SBA website at

*Guarantee fees are initially paid by the lender but they have the option to pass that expense on to the borrower at closing.

Micro Loans

Other loans available for start-up and existing businesses include micro loan funds from ADVOCAP.  The preferred amount of loan requests should be between $2,000 and $15,000 and for a term of not more than 5 years. According to Kathy Doyle from ADVOCAP, “fund requirements are different with each loan program however all funds have a provision for working capital and some of the funds, like SBA funds, are available to refinance existing debt.”  Common uses of the funds include inventory, supplies, furniture, fixtures, machinery, and equipment. Preferred applicants for the micro loan programs will be persons with limited incomes who own or are forming a small business. For most loans, income will be measured at 150% of the Federal Poverty guidelines or less during the previous 90 day period. Other applications will be considered based on the applicant’s capacity and commitment to create well paying jobs for low income persons.  For more information about ADVOCAP and their loan programs, see their website at:  .

Revolving Loan Funds (RLF) or Gap Financing

The Fond du Lac County Economic Development Corporation helps finance the “gap” in funding for a start-up or existing business expansion.  If a company needs $50,000 total for new machinery but they only have $15,000 towards the project and the bank puts in $20,000, the “gap” of $15,000 could be funded by an RLF or even a microloan from ADVOCAP.

FCEDC administers four revolving loan funds to eligible companies or individuals up to $300,000 (loan amounts average $75,000). FCEDC’s Director of Business Development, Bill Steimel explained, “the Revolving Loan Funds were established to create employment opportunities, encourage private investment, and provide a financing alternative for new business start-ups or expanding existing businesses.” All of the funds require some form of job creation and a private investment (including bank loans or investor funds) that match the FCEDC loan amount (1:1 match).  Most funds also require a majority of the jobs going to low-to- moderate income persons.  For more info on FCEDC’s loan options, please refer to:

Non-Traditional Funding Sources through Equity Financing

Another way to raise capital is through non-traditional or equity financing options like Crowdfunding and angel investment funds. Equity financing typically refers to the sale of an ownership interest to raise funds for a start-up business. With equity financing, if a business fails, the money does not have to be paid back.


Currently, donation or reward Crowdfunding through Kickstarter, Indiegogo and other online platforms has been the main funding option. Reward Crowdfunding is an online process for receiving funding for projects, products or new ideas from a variety of “funders” or the “crowd”.  The funder or money giver gets either nothing in return or receives some sort of giveaway or a promise of a reward or benefit eventually (t-shirt, product that is being promoted, tickets, etc.) if the funding goal is met.  If the funding goal is not met, the funding crowd doesn’t have to part with their money. Equity or investment Crowdfunding is currently limited to accredited high net worth investors.  This form of funding is now undergoing new SEC rules and regulations to allow smaller investors to get in the game.

According to Randy Melzer from SCORE, “Crowdfunding requires a planned and strong marketing campaign that could cost up to $5,000.  It combines the use of web sites and a proactive social media campaign to launch, drive and reach a successful end or funding goal.”  To learn more about SCORE’s mentoring and small business classes, which has included Crowdfunding, check out .

Angel Investment Funds

An accredited angel investor is an affluent, high net worth individual who provides capital for a local business start-up in exchange for ownership equity for a period of time. There are a number of angel investment funds in Wisconsin where investors organize themselves to share research and pool their investment capital, as well as to provide advice to their portfolio companies.  Angels on the Water is one of these funds in the New North region (18 county region) of Wisconsin. A good opportunity or business idea for this fund would: need a modest amount of equity funding; will ultimately compete nationally or globally; offer a minimum “upside” return expectation of 10X on the Fund’s initial capital investment within 5-7 years; has a current or potential quality management team;  and has a potential for creating high quality jobs.

According the Elizabeth Hartman, fund administrator for Angels on the Water, “a business plan is a must and markets need to be validated in order to even be considered.”  If an early stage idea passes initial screening, the entrepreneur would then do a pitch to the Investment Committee similar to what people see on Shark Tank but without the hype and TV drama, however tough questions will be asked.  To find out more about Angels on the Water, review their information at: .