Fund your Alabama business

When your own money is not enough, start with an advisor, then read which program actually lends. The Alabama SBDC does not lend and does not write a grant check. Innovate Alabama’s LendAL programs sit beside a bank. Regular SBA loans also come from a lender.

What’s different in Alabama

• Advising is free. The Alabama SBDC offers free and confidential business advising¹.
• The state loan programs need a lender. LendAL works with lenders. The business should already have a bank relationship, and the SBDC can help find a participating lender. The SBDC does not provide loans or loan guarantees².
• The SBDC’s grants page says to plan to open without one. Prize money exists through pitch competitions. It is not startup cash for every new business.
• One SBA office covers the state. Birmingham serves all 67 counties⁴.

Do this

1. Write down what you need and what it is for. Startup costs, inventory, equipment, and a purchase of a business are on the LendAL list. Passive real estate is not. The allowed uses are a business purpose, including startup costs, working capital, buying a business, franchise fees, equipment, and inventory, and not passive real estate².
2. Book advising. The Alabama SBDC says the advising is free and confidential business advising, for people starting a small business in Alabama and owners expanding one¹. Workshops are mentioned on the same page and are not in that sentence.* Ask what a class costs before you sign up.
3. Use the SBA office. The Alabama District Office in Birmingham offers funding programs, counseling, federal contracting certifications, and disaster recovery for all 67 counties⁴.
4. Understand who lends the regular SBA loans. 7(a) and the other ordinary SBA loans come from participating lenders, not the SBA. The SBA loans guide explains who makes each kind.
5. Read LendAL before you assume the state will lend to you directly. The SSBCI page says The SBDC does not provide loans or loan guarantees. LendAL works with lenders. The business should already have a bank relationship, and the SBDC can help find a participating lender. LendAL’s programs are loans that must be repaid, not grants, and not forgivable loans. Collateral support supplies pledged cash to the lender, up to 50 percent of the loan, and not every applicant should expect the full 50 percent. Those loan amounts are 10,000 to 5 million dollars, with the interest rate negotiated with the lender. The William Howard Wills (WHW LGP) Loan Guaranty Program is a partial guarantee so a lender can approve a term loan or a line of credit. Amounts are 50,000 to 5 million dollars, and the rate is negotiated with the lender. Loan participation is a maximum of 30 percent of the loan, with exceptions considered one by one². The business should be headquartered in Alabama, or have Alabama residents as founders.
6. Read InvestAL only if you are raising equity. It is for equity for high-growth startups that already have matching private capital, and for venture funds. The page calls it not a grant program, and not a matching program. The co-investment program puts in 5,000 to 1,000,000 dollars, up to 50 percent of an equity round, in a high-growth company raising less than 20 million dollars with fewer than 500 employees². You apply to pitch on the Innovate Alabama site the SBDC page links. A decline comes with a referral to technical assistance, not with a loan.
7. Read the grant page the same way. The grants page says Most businesses should plan to start without a grant. In general, the U.S. government does not provide grants for starting or expanding a small business. There are no federal grants to help people start for-profit businesses. Pitch competitions in Alabama can award prize money, often from 500 dollars to 50,000 dollars or more, and each one has its own rules³. The Alabama SBDC does not provide grants. Be wary of anyone selling access to a guaranteed grant.
8. Keep your paperwork ready. Lenders and advisors ask for your formation documents and EIN. Register your business and Get your tax IDs.
9. After a declared disaster, the SBA can lend directly. Disaster assistance covers several kinds of loan, including physical damage, economic injury, and military reservist economic injury, after a declared disaster, and only if you qualify. Economic injury loans are for small businesses the SBA decides cannot get credit elsewhere⁵. A disaster by itself does not qualify you. Check the declaration and the loan type before you apply.

What you get back

An appointment with an advisor, and help preparing what a lender asks for. A loan decision comes from the lender on a LendAL program, or from the SBA only on a disaster loan you qualify for. An equity decision comes from Innovate Alabama only if it chooses to invest. These pages do not promise a finished plan or an approval.