Funding for start-up and growing businesses
Individual Development Accounts provide matched funding that entrepreneurs can use as seed money to start or expand their business.
October 28, 2012 - Author: Diane Smith, Michigan State University Extension
Starting or expanding a small business requires capital on the part of the new owner. At this early stage of the business, funding usually comes from the owner, perhaps loans from family and friends, and less often from a formal loan.
Another tool available to some entrepreneurs is an Individual Development Account (IDA). An IDA allows an entrepreneur to save money in an account for a specified period of time. After reaching their individual savings goal, they would receive matching funds to start or expand a small business. These matching funds are typically raised and offered by a community-based organization that is hosting the IDA program.
In order to be eligible for an IDA, an entrepreneur must meet have a household income below 200 percent of the Federal Poverty Level and must be working.
Financial education for the entrepreneur is a critical part of the IDA program. This part of the IDA program helps entrepreneurs in correcting credit problems, establishing a budget and savings schedule, and determining a long-term money management plan.
For more information, you can visit the Michigan IDA Partnership website. For those in the Lansing area, contact Tami Farnum at The Franklin Street Community Housing Corporation at 517-482-8708 or by visiting the site at 618 Seymour, Lansing, Mich. 48933.
The Michigan State University Product Center provides counseling in creating a start-up financial analysis as well as cashflow projections. For more information, visit the Product Center website or call 517-432-8750.