How to Raise Capital for a Small Business

In order to get your small business up and running, you may need to raise capital. Finding money for your small business can be a daunting task, but it can be done if you know what you're doing. Follow the instructions below to give yourself the best chance to raise capital for your small business.

Difficulty:

Moderate

Instructions

Things You'll Need

• A Business Plan

1. Create a Business Plan - You will need a business plan, which is a document containing the aspects of your intended business, as well as planned financial calculations, in order to raise capital and qualify for loans. See the resources section below for links for how to create a business plan.

2. Visit the SBA (Small Business Administration) website (see resources below) for information on how to receive a loan from them for your small business. You will need to answer some questions and go through a process, but know that the SBA has been helping small businesses raise capital for many years now.

3. Visit your local bank or loan authority. It will be difficult to receive a loan and raise capital from a bank for your small business, especially if you do not have a history doing business with them or any type of small business experience at all. It's worth a try though, and just be sure that you have a great understanding of your business, as well as a Business plan in hand to give to them for review.

4. Find an angel investor or venture capitalist to invest in your small business. Angel investors and venture capitalists are very rich people who have tons of money who want to invest in business that they think will help them make money too. You can find a myriad of angel investors in your area, as they hold meetings very often to discuss potential investments. Be prepared, however, to speak in front of a panel and present your small business to them and be bombarded with many questions. They are only doing this to protect their money, so it's best to be prepared with any type of questions you think they may ask. Avoid a monotonous presentation, as you want to impress them in order to have any chance of raising capital for your small business.

5. Find joint partners and other investors (like family) who may want to take part in your business. You may need to pay back interest on their loans, and/or even give them part ownership in the company, but this can be a really easy and convenient way to raise capital for your small business.

Tips & Warnings

• Find out how much capital you're going to need to raise in order to get your small business up and running. This should be outlined in your Business Plan (see resources below)

• Be careful when doing business with any friends or family members, as many of your opinions and decisions may clash and lead to uncomfortable meetings. You don't want to lose a friendship over something like small business.

Resources

• Small Business Administration Business Plan Basics
• Small Business Administration Financial Assistance to Raise Capital for a Small Business
• Wiki Angel Investors for Small Business
• How to Pitch to Angel Investors to Raise Capital
• Angel Investors on Small Business Notes
• How to Raise Capital with your Small Business using Angel Investors