How to Find Money To Start Your Business

Finding money to start a business is not an easy chore. But knowing where to start is the first step. Most business start-ups fail because they do not have adequate funds to see their business through the first three years. There are resources available for you to use to begin your business. Read on to learn more about them.

Difficulty: Easy

Instructions

Things You'll Need:

• Computer
• Internet connection

Financial Sources for Business Start-ups

1. Hopefully, you have saved up enough money to begin a checking and savings account for your business. The bank will be your first source available to loan you money. Include your start-up money and additional funds for the next three years.

2. Earnings from your job is an excellent source of income, especially if you have money market or retirement accounts. Another method is to build up enough to start an investment account and use investment funds to start your business. Get seed capital grants for women, minorities, small business owners, and other individual loans at www.grants.gov.

3. Utilize low interest credit cards with larger credit lines, as an initial start-up fund for your business. Try microlenders, or alternative funding sources such as the Prosper Marketplace at www.prosper.com which is an online "person-to-person funding source. Or try Accion USA - They have loaned money to people since 1991 and their loans range from $500 to $25,000.

4. Other people’s money (OPM) is another way to find funds for your business. You can receive loans from relatives, friends, or fellow employees. Or look for an angel investor, who uses his money to invest in your business,just go to www.perfectbusiness.com and find a whole list of angel investors. Some popular sites for finding money is www.americanexpress.com, www.venture.com, or www.quicken.com,
   www.angelinvestors.com.

5. Another alternative method to raising funds is to borrow money from would-be suppliers or colleagues that may be instrumental in doing future business with you. Turn your employer into your first client. If you have a letter which guarantees advanced sales, you can use this to guarantee your that your business will succeed.

6. Cash settlements or inheritances can also be used to finance business. If you have a trust or will receive money from an inheritance, you can get your money early from a cash settlement agency. There are loans for Community Development Loan Funds (CDLFs) who give loans to aid community renewal, and Consumer Finance Companies who make small personal loans secured by 100% collateral.

7. Micro-loan programs are popular because they are easier to get approval for. There are numerous program for women business owners, technical companies, minorities, and others. Contact the Small Business Administration via their website www.sbaonline.sba.gov. The SBA guarantees loans for 75 to 80 percent of the loan.

8. If your business is a franchise, try the franchise financing options at www.franchise.org which lists more than 20 banks and non bank lenders for franchises. Other funding sources include: grants for organizations, credit unions, Life insurance policies, disability grants and home equity loans.

Tips & Warnings

• Research, research, research.
• You must tailor the source of funding to your business or business need. It is often easier to get equipment funding first.
• Most institutions that loan money to individuals usually loan to owners who have good credit and have already began their business with a client base already established.
• Be sure to clean up your credit rating before attempting to get any money from banks or loan institutions or you can forget about getting a loan.
• Get your credit score and information at the major credit bureaus like Equifax, TransUnion and Experian before you turn in applications for a loan. Take a look at what the loan officers will see in your credit and get some help to make your credit score better.
• An excellent source for helping people to restore their credit is a company called Financial Destination. Find their website at www.fdirep.com/133198. They have been very successful at restoring people’s credit and raising their credit scores or try www.creditunmasked.com and use their credit raising services

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on 2/16/2008 AS SEEN ON OPRAH & 20/20..

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