“Bootstrapping” involves using your personal finances to fund your business venture, and it’s a common practice for start up WISPs. While this is a noble concept, it can leave your business starving for cash. A cash-strapped business is like a fire without fuel. It has no room to grow and will fizzle out sooner than opposed to later.
Access to funds is critical to growth, but WISPs can get caught up in the day-to-day operations, delaying their financial planning. Chapter 1 of our 2019 WISP Guide addresses this issue, offering practical options for financing through lenders, and through winning rural broadband grants at the state level.
Financing through Specialized Lenders
Financing enables service providers to remain agile. They can compete by acquiring technology when it’s new, keeping them on the cutting edge. Capital preserved through financing can then be used to hire staff, rent tower space, and make other strategic or operational moves. Additionally, new payments may be tax deductible (consult a tax expert for advice).
Loans can be financed through a variety of sources: local or national banks, private lenders, even through the same agencies that provide grants. The loan process can be cumbersome when applying through national banks and federal agencies. However, another way to receive a loan is through lenders catering specifically to tech companies such as WISPs.
Advantages specialized lender financing include:
- Simple documentation and procedures
- Flexibility in choosing terms
- Affordable monthly payments spread over the useful life of the equipment
- Minimal up-front cost of ownership
State Level Grants
Service providers researching in their local area may discover that funding opportunities exist somewhat under the radar. In some locations, funds and/or tax incentives are directly available for WISPs. Other times, these incentives may be available for potential customers in need of an internet provider, which can indirectly translate to new business for WISPs.
Local Partnerships Bring Success
One particularly effectively method of winning local grants can be through establishing local partnerships. Consider this insight from Michael, President & Owner from Virginia WISP:
“They key is partnering with a county or municipality and building relationships with their administrators. They know where grant money is, and they help with grant writing. In turn, we provide the missing piece of the technology partner they need to deploy, expand, or manage their network as the grow."
For more information on securing funds through financing and rural broadband state grants, and to see more specific examples of WISPs having success in this area, download our WISP Guide 2019.