April is traditionally Move Your Money Month in the shop local community. Bank Local and Invest Local are the financial parts of the shop local movement.

In 2023, the timing couldn’t be more noticeable. High profile bank failures, lots of talk about other banks in trouble, and a serious debate about the financial system (AGAIN!) make Moving Your Money to a local bank more attractive than ever.

Local banks still exist in many small towns, and some of you have multiple local bank choices. If you don’t have a locally owned bank, regional banks may be a better bet than the giant banks.

If you have concerns, talk to your local or regional bankers. Some like Jill Castilla of Citizens Bank in Edmond, Oklahoma, (admittedly in a suburb, but still a great role model) go to great lengths to be accessible to their community.

Find your bankers online or at community events. Ask questions about how they manage the kind of risks that brought down big banks recently. See what you think of the answers. (Hint: they’re much more careful.)

Move Your Money

Really, it’s not that hard to move your money to a local bank. You’ll likely get all the important services you’ve come to rely on like mobile deposit and online bill pay. Even the bank in my tiny community of 30 people is online-savvy. (Shout out to Hopeton State Bank: Shaped by the past, Focused on the future.)

Need the how-to-move list? Search or ask your favorite AI for a list of steps to move to a new bank.

Source: People First Economy

Run a Move Your Money campaign in your community

Join the Move Your Money movement at AMIBA (American Independent Business Alliance). They’ll email you with resources throughout April. Check the Top 5 Reasons to Choose a Community Bank.

Get inspired by the resources page from The Local Crowd in Monadnock, NH: Move Your Money

Advocate for change with the policy-level info from the ILSR on Community Banking.

Discover more about local banking and local investing

Beyond shop local is bank local, 2010

Local investing could solve several rural business problems, 2011

Local investing will change the face of small towns, 2012

Small Town banks know lots that big banks don’t, Small Town Rules, 2013

Community banking is critical to small towns, audio, more from Jill Castilla (mentioned above), 2014

Economic self defense for small towns, 2020

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Will you run a Move Your Money campaign? Send us your small town business stories, and let us know what questions you have.

Rather than seek outside funding to get started, Shawn Anderson grew his kettle corn business from his yard and on the road before buying an existing business in Webster City, Iowa. Photos via Deb Brown.

If you need outside funding to get to the next step in your rural small business, your next step is too big.

Before you bet big on your business idea, test it with small steps. Make some sales from your front yard, then try a booth, then a trailer, then think about moving up to a small building.

Before you borrow money to buy a new piece of equipment, find a smaller step you can take. Borrow or rent equipment temporarily. Share equipment with another business, splitting the cost. Subcontract out that part of production to another business. Redesign your product or process so you don’t need that equipment after all.

Before you go into debt to fix up an older building, think smaller. Find a tiny space to occupy first. Share space with an existing business. Go mobile. Open smaller in a few towns rather than bet everything on a single location.

Go Small or Go Home

This is some hard-won rural wisdom. Better to stay small than go into big debt. Expect that you’ll face some zero income times. Don’t take on more responsibilities than you can cover. Be ready for banks to be bought out, loan portfolios to be sold and resold to unsympathetic lenders. These are part of the Small Town Rules: Be Small to Grow Big, and Plan for Zero.

Have you taken small steps?

If you have a story about taking small steps to stay independent, I’d love to hear about it.

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Five businesses and community groups pitched ideas at the first “Food for Thought” event put on by Main Street Enid, Oklahoma. Photo by Becky McCray.

Have you heard of “soup” events?

People pay a small amount, say $5, to attend a local pitch event. Local groups pitch their ideas, everyone votes, and the winner gets the money.

The real winner is the community, of course. It boosts activity, gets people talking to each other, builds momentum and rewards people who are doing great things locally.

The first one I heard of was the Detroit Soup project. I got to attend one when Main Street Enid, Oklahoma, kicked off their series called Food for Thought. Wheeling, West Virginia, calls theirs Show of Hands.

How Wheeling’s Show of Hands Works

Alex Weld and Jake Dougherty from Wheeling Heritage shared more about it at the Main Street Now conference in 2019. Materials from their presentation are currently available through the Main Street Now 2019 app, but I expect they are likely to disappear over time.

Wheeling holds events quarterly. The organizers said they wanted to disprove the common belief that “nothing is happening here.”

Action inspires action, they said. Public action inspires even more action and illustrates change.

Lots of people are invited to come together, pay a small amount at the door and enjoy a bowl of soup from communal soup pots. Local groups share their ideas for a project or business, and everyone gets a vote. Winning pitches earn the money raised, and everyone has a great time.

There’s a lot of talking and networking as people see friends and acquaintances they may not see everyday.

Each event also features an update from a past winner, building momentum.

Getting started

They started small and kept expenses low. They borrowed an event venue and brought potluck soup.

Initially, they worried that ticket sales might not add up to very much award money, so they looked for a sponsor. They found a local business to donate $1,000 seed money for the first winner. Then they put money raised through ticket sales on top of that. The sponsor committed to seed four events that way, a full year. Now that they’ve been going for awhile, even more businesses participate by sponsoring. Now most winners receive around $5,000 total.

They limited the number of pitches to four. That kept the event from being too long and kept it easier to decide who to vote for.

Finding applicants to pitch

To make sure they had four presenters their first time, they personally talked with people to encourage them to participate and pitch. They picked exciting projects, ones they knew would draw people to the event. Over that first year, most of the ideas came from nonprofits. Now more presenters are from small businesses wanting to start or expand.

You can’t put the application up and sit back and wait, they said. You have to groom solid applicants.

What holds people back?

They found that many small business people said they had a worthy idea, but just weren’t ready to pitch. That got the organizers thinking about the barriers holding small businesses back from growing, so they ran their own survey.

What they learned was that there were all kinds of knowledge gaps, different things people struggled with in their businesses. As a result, they began doing more small business training events in town, building a network of potential participants.

Do your own Soup event

As you’re thinking about putting your own spin on this event, think about non-monetary prizes. Jeremy Zeller with Oklahoma Main Street suggested pop-up space for example. What else could you offer winners?

Consider how many “winners” you want, and whether winner take all is the right split. Maybe you can make sure each idea walks out with some funding. Maybe awards can be in proportion to the votes received.

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Yolanda is just one of the US business people who has received a loan through Kiva.org. Photo by Brandon Smith via Kiva

You might have heard of Kiva, where a crowd of regular people pool money to make small loans to business people in the developing world. But you probably didn’t know they are making loans to small businesses in the US.

In fact, I was surprised to find there has been a representative of Kiva active in my state of Oklahoma for over 5 years. They’ve loaned to several rural entrepreneurs in Oklahoma, including Rodney who runs a thermal imaging business the town of Kansas, Oklahoma (pop. 800). He used a small loan to do more marketing and reach a whole new group of potential customers.

If you’re looking for a small loan for your small business, Kiva is worth considering. Loans can be up to $10,000 at zero percent interest.

You can also help more people get loans through Kiva in your community. Anyone can spread the word and point small businesses directly to the Kiva website.

Nonprofit organizations can also directly administer loans as a Field Partners. Individuals or groups can serve as Trustees who endorse trustworthy borrowers without any financial involvement or liability. Learn more about these partner programs at Kiva.

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Empty buildings in small towns are often empty for a reason, and that reason is often that they need work before any business could use them. Remodeling costs can be astonishingly expensive, so people often ask where they can find grants, loans or other funds to help them.

Here are some of my favorite “usual suspects” for finding funding to remodel or renovate old buildings in small towns in the US:

• USDA Rural Development has an often-changing list of programs that serve rural areas. The Community Facilitates funds are a good place to start. But don’t stop there. Keep digging for more leads. Talk to your state or regional staff about your plans. They’ll know more about what might apply. Get all the Rural Development info here.
• RURAL LISC (Local Initiatives Support Corporation) Community Facilities Fund provides loans “to help develop and improve essential community facilities in rural areas.” That includes health care centers, hospitals, educational facilities, and other nonprofit and public facilities in rural communities with populations under 20,000. Find out more with this info sheet (PDF).
• EPA Brownfields offers funding (some grants, some loans) to assess any potential environmental issues and start on cleanup. Check into this BEFORE transferring, selling or buying the property, because there is some legal protection if environmental issues are handled before you acquire the property. Check out the Brownfields program here.

Ask smart people

Next, ask other smart people for more leads and programs that could work for you. Here are some good sources of information in your state:

• State Main Street program
• State historical society
• State department of commerce, economic development or the equivalent in your state
• Statewide community foundations
• Building or construction contractors who work on historic projects

That last one, building contractors, is sorta sneaky. Contractors that have worked on other historic projects may know where the funding for those projects came from. You will have to ask around to find the right companies and then to find the people inside the companies who know, but they can be an excellent source of info.

Investigate special local funds

You’ll have to dig to find any local-only sources. Read the local news. Trawl through the back issues of the local paper at the library. Pay attention to council, board and organization agendas, minutes and meeting reports. Watch for any mentions of how projects got funded

• Local community foundations
• Local economic development boards, and funds that may offer incentives for new or expanding businesses
• Special tax set-asides designated for community or economic development
• Local utility companies

The special tax set-asides don’t exist in every county, but they can be amazingly well funded. For example, a commissioner from Cloud County, Kansas, told me they set aside part of the property taxes each year from a wind turbine farm to use for economic development.

Local utilities have a vested interest in growing their customer base, and many cooperatives offer loan funds for business expansions or startups. Check with all the utility providers in your area.

Who owns the building?

Some of these leads I’ve mentioned will work with for-profit businesses, some only with non-profit or public entities. It’s worth thinking about whether you need to own the building yourself, or if it may make sense to transfer ownership to the city, county, tribe, or a non-profit. Maybe it makes more sense with cooperative or community ownership. Don’t dismiss these options until you’ve looked into all the available sources in your area.

Share the costs with more investors

Consider whether you can rally a group of locals to invest together.

• Waynoka, Oklahoma, renovated buildings in their downtown using a nonprofit foundation, then sold the buildings
• Minneapolis residents remodeled buildings in small neighborhood business districts (which are a lot like small towns) using a cooperative as the ownership structure

Do you have any ideas?

I’d love to hear your own ideas for finding money. Leave your thoughts in the comments, or hit reply if you’re reading this in your email.

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When I was a kid, we had a water well at our house. The pump would run long enough to fill up the tank, then shut off. So the water pressure in the house was either all or nothing, kind of like your income.

Being self-employed is almost synonymous with wild swings in income. Compared to a steady job with a steady paycheck, self-employment feels like a roller coaster ride.

And it’s not just self-employed. It’s also all kinds of people with irregular income. Recent data reported at Small Biz Labs showed both people with low incomes and people with high incomes experiencing big swings in their income, month to month. While I don’t have the data on it, I’m sure this is especially true in rural areas where part-time employment and time between jobs can be larger challenges.

Our water pressure problem was solved with a pressure tank. Water flowed in when the pump was on, then a reserve of air pressure pushed the water out steadily as needed. What we need is a pressure tank for your income.

Rather than live through wild swings each month, pump your income into a pressure tank (a separate checking or savings account), and push out a steady amount each month.

Start scrounging up every extra dime and build up your pressure tank account. When you have one of those boom months with higher income, stuff as much as you can away in that account. Then when you hit the bust month with no income or low income, draw out a supplement to even things out.

If you’re really good, you can take your total annual income from last year, divide by 12, and use that as the baseline. Anything over the monthly average goes into the pressure tank. Anything under that, you get to supplement.

I shared this idea with my friend Marc Pitman*, and he told me more than a year later that he found it helpful. I hope you’ll find it helpful, too.

*Marc helps leaders, especially in nonprofits, lead their teams with more effectiveness and less stress. Stop by Concord Leadership Group to get to know him. 

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Photo by Becky McCray

Whether you are starting a business or looking to grow your business, there is always a need for capital or financing.

With the advent of Internet, new opportunities for capital have developed. Plus all of the old methods are also still a possibility.

Typically, you, the owner, make the first investment into the business. It may be savings or income from your day job or from another family member. You may also look at borrowing from family and friends. Sometimes it may be sweat equity but it may also be the home you live in put up as collateral.

Another commonly used technique is bootstrapping, finding ways to get the job done cheaper or with bartering or doing without.

And don’t forget the goal of making money which can be another source of funds with which to build your business.

Pam Schallhorn, a colleague from the University of Illinois Extension, recently introduced me to a free ebook, “Startup Wisdom: 27 Strategies for Raising Business Capital.”

This book, done jointly by the Washington State Department of Commerce and Washington State University Extension, covers the methods I just listed plus other funding options such as angel investors, crowdfunding, and “Shark Tank.” It even mentions the use of lottery winnings (not likely to happen). Free money is not discussed (typically a myth) but it does discuss grants which are hard to find and are the closest thing to free. Realize thought that they often come with restrictions, may require matching funds, and take time to both write the application, wait for the review process and then wait even longer for the funds to arrive.

When looking for funding, you need to prepare yourself. A business plan is often needed and some want proof of feasibility. For any type of loan, you will need a clean credit record.

During the course of your business, you probably will use multiple means of financing. Different scenarios may make the various alternatives more or less acceptable.

A useful tip is to build a relationship with your banker. At some point in every business, a loan is often needed. And even if you never go that way, your banker can be a good adviser to your business.

It’s important not only to build the relationship but to work at maintaining it. Keep your banker in the loop with what is going on with your business.

Financing is part of building your business. Take the time to learn your options.

How many different ways can you think of to raise money for your small town business? Bank loans, of course, but then where?

Maury Forman with the Washington State Department of Commerce Office of Economic Development & Competitiveness has put together 27 different strategies for raising capital in an ebook called Startup Widsom.

Good news: it’s available at no charge to read online or download.

More good news: even though it says it’s for Washington State, it’s good for businesses across the USA, but probably also good for small businesses outside the US, as well.

Even if none of the 27 strategies work for you, you’ll expand your thinking.

Read Startup Wisdom online here.

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Photo (CC 2.0) by GotCredit, on Flickr

One of the most common requests I get is to help people access “free money” to help them start their business.

Regretfully, my response is there is little, if any, free money available. Instead business owners need to depend on their own personal funds, family and friends, or good bootstrapping.

At some point though, most small businesses need to access additional funds and that will usually come in the form of a loan.

While the reason for the loan may vary, from needing more raw materials to buying additional equipment to buying inventory to hiring more people to a cash flow issue, the early sources of business financing, bootstrapping or personal savings, just cannot cover the need.

So the next step typically is to get a small-business loan.

People are often concerned about their ability to get a loan. It really is not very different from getting a personal loan. The bank wants to know your credit history, what you have for collateral and your ability to repay the loan.

And when your business is new, the banker will want not only this information about the business but also from you, the owner.

There are several common mistakes small-business owners may make when applying for a loan:

• Having an incomplete or inaccurate application
• Not providing information in a timely manner
• Lack of a clear explanation of how much money they need and how the funds will be used
• Withholding personal guarantees (this is especially true for startups and smaller businesses)
• Not knowing their personal and business credit rating
• Not showing efforts to improve their credit ratings
• Not having a solid business plan with reasonable projections

Bankers understand that businesses often operate in cycles, with ups and downs. They also know the difficult in starting a business. So make your projections as accurate as possible and don’t hide any information. What the bankers want is realism and a clear path for building the business.

It is also important that the business owner do his or her homework in finding a bank for your loan. Find a bank and banker who understand small-business finance. Like finding other professionals such as your certified public accountant and attorney, it is important to research the bank you hope to use.

Finally, once you get your loan, stay in regular contact with your banker. He or she can provide reliable guidance and possible solutions to challenges that occur. They don’t like surprises. They are willing to work with you as you need to make adjustments.

Business loans are crucial in your growth. Learn early they work and on, what you hope to be a long-term relationship, with your banker.

Starting a business means a need for money

Potential business owners often struggle to find those first dollars.

Asking for help to find grants, or ‘free money,’ is a common request. While there may be some small grants, these are not common and the bottom line is that the business owner needs to have funds available to invest in his or her business idea.

So how does the business owner get the cash he or she needs?

Bootstrapping a business startup, or using some simple means to finance the business, is common. People might rent or lease or barter. They make-do or go without. Owners are always looking for ways to get something at reduced price or free.

Successful business owners offer the following ideas:

•  Use personal savings. If the perspective business owner does not have any savings, he or she may need to first save enough money to cover some or all of the startup costs..
•  Maintain some cash flow by continuing to work at your existing job while starting your business at night and on weekends. During that time, you also can focus on building a savings account. In addition, staying in your current job means you’ll keep your health insurance benefits, giving you a feeling of security.
• Do consulting working while working on opening your business.
• Have family members in the work force. This means discussing your idea of being an entrepreneur with your family and making sure your family understands and supports your business idea.
• Home equity or cash from a retirement plan are possible funding sources. However, you must understand the risks. If the business fails, you may lose your home or have little or no savings to provide retirement income when you want to quit working.
• Turn to family and friends for startup funding. The cautionary note with this method is to make sure you put all agreements in writing. You do not want misunderstandings to cause a problem in the future.
• Use credit cards. However, you should do this cautiously for two reasons. The first is that you may need those funds to help you through the initial period when your business generates little income. Also, you are putting your credit history at risk, and you may need good credit for a future business or personal loan.

Remember that usually the first dollars into your business are yours. At the startup stage, angel investors are hard to find. And getting a banker or investor is also difficult and the cost of their money can be high. If a banker does decide to give you a loan, they will probably ask for a personal guarantee and may want your house or other personal financial assets as collateral.

So build some savings. Get your credit score in good shape. And be prepared to be creative in funding your business.