Frequently Asked Questions
What is Thread Capital?
Thread Capital is a nonprofit organization focused on ensuring that all residents of North Carolina have access to the resources they need to start and grow businesses. Thread Capital provides access to capital, coaching, and connections in the belief that with these tools entrepreneurs will create jobs and promote more equitable economic mobility in all 100 North Carolina counties. With the right support, entrepreneurs can change the trajectory not only of their families but also their communities.
Thread Capital was launched in 2018 by the NC Rural Center and continues to be an operating subsidiary of the Center.
What opportunities and services does Thread Capital offer?
Thread Capital works one-on-one with small business owners to identify and provide connections to the optimal financing, networking, and coaching resources for their business. We work with individuals who have good ideas and experience but may have difficulty obtaining financing for their business.
Thread Capital is only one part of a larger ecosystem. We provide direct financing to businesses and provide connections to other lenders if we are not a good fit. We work with additional partners across the state who provide additional coaching and networking. These include Small Business Centers and NC Small Business and Technology Development Center offices.
Where does Thread Capital operate?
Thread Capital is based in Raleigh but offers its services in all 100 North Carolina Counties.
How do I know if I would qualify?
The only way to be sure is to apply. Our basic requirements are:
- You must be 18 years of age
- Your business must be based in N.C.
- Your business should not be involved in adult entertainment, multi-level marketing, real estate speculation, lending, or gambling
- You should have no unsettled public judgment, bankruptcy, delinquent taxes, and delinquent student loans unless they are on an active payment plan
- Anyone who owns more than 20 percent of the business must sign on the loan
- Business must be for-profit
And, of course, you need to have a sound business idea
Can I use the loan to start a new business?
Absolutely. Many of our borrowers are start-ups. Of course, we also fund existing businesses.
Are there any restrictions for the use/purpose of the loan funds?
The loan funds can be used to start a new business or expand an existing business. Typical uses of proceeds include working capital, inventory, equipment, and leasehold improvements. Loan funds cannot be used to pay off personal debt or credit card debt, for personal expenses, or for real-estate speculation. The loan also cannot be used to pay-off delinquent federal, state, or local taxes.
What is the application and approval process like?
The application should take you about 10 minutes to complete. It will ask questions about your personal and business finances, available collateral, etc. Once your application is received, staff will review the application and will contact you to schedule a 30-minute interview. After the interview, if you want to proceed with a loan you will be asked to provide documentation about you and your business. Once we have the necessary documentation you can expect a loan decision in a matter of days and the funds shortly thereafter.
How much can I borrow?
Thread Capital will work hard to help you access the capital your business requires. We may do that by lending you money ourselves, or we may help you get to one of our partners who are a better fit. Thread Capital has a network of resources for small business borrowers seeking as little as $500 and as much as $5 million. We make loans of up to $50,000.
What are your interest rates?
Interest rates vary based on the age of the business, the size of the loan and a handful of other factors. Generally, you can expect to pay higher rates for small loans and lower rates for larger loans.
What documentation will you need for my loan?
We need to verify the information in your application with additional documentation. The amount of information we ask for will vary based on the loan size you are seeking. Typical types of information include:
- Personal and business tax returns
- Personal and business bank statements
- Internally prepared financial statements
- Detailed list of collateral including any existing liens
- Invoices/estimates on equipment, furnishings, fixtures, etc. to be purchased with the loan proceeds
- Verification of other income
- Start-up businesses (less than 12 months of documented revenue) will need a business plan, resume, financial projections, and proof of owner investment
Additional documents may be required on a case-by-case basis.
Are there any loan fees?
Fees will be charged to close the loan and file liens on collateral. These fees can be financed in your loan.
Is there any pre-payment penalty?
No. A loan can be paid in full at any time without penalty.
How long will I have to pay you back?
The length of your loan terms will be based on how the loan funds will be used. Our maximum loan term is seven years.
Do I have to put up collateral?
If you have assets you will be expected to offer them as collateral. You are still eligible for a loan if you do not have collateral to pledge.
How do I repay the loan?
One of the requirements of the loan will be to have the monthly payment automatically deducted from your business bank account.
Do I have to be incorporated to borrow money?
No. We fund any legal, for-profit entity, and many of our borrowers are sole proprietors.
Can I get free money to start my business?
Thread Capital offers business loans, not grants. Grants are generally not available for small businesses but from time to time a program may be made available somewhere in North Carolina. Feel free to ask us if there are any active programs.
What if I can't pay you back?
We recognize that businesses fail. It is our hope that together we will arrive at a financing solution that gives you the best chance for success, but sometimes it won’t work out. When you take out a loan you are expected to pay it back in full, with interest. Any collateral you put up is security against the possibility of default and can be repossessed. If you default on the loan, we will use whatever legal recourse we have available to recover the funds we are owed.
How long before I can get my money?
The pace of the process is driven mostly by how quickly you are able to provide documentation for your business. Thread Capital’s internal process can take as little as seven business days.
If I apply and you turn me down, will that show up on my credit record?
A credit inquiry will show on your credit report. The number of credit inquiries is one of the factors in determining your credit score.
If I apply, who else will see my information?