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Step 1
The first step in raising capital for your business is to make a formal business plan for investors and lenders to review. The business plan is also good for you to keep as a business owner as this formalizes your plans and goals. The business plan describes what your business does, how it will make profits, and what kind of steps will be taken to achieve success. There are many detailed guides on how to make a business plan; I'd encourage you to learn more about making a business plan if you are feeling unsure on how to do so.
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Step 2
Small business formation is usually fairly inexpensive to begin. Most people can fund the start up costs with personal savings and investments. However personal and business assets are usually reviewed by lenders thus the first step in raising capital is to go to apply for all business grants that you may qualify for. You can search the Internet, inquire with the Small Business Association (SBA), or contact your local government officials for business grant leads.
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Step 3
Next go to your local SBA and apply for an SBA loan. Raising capital for business with an SBA loan is one of the first liabilities you should consider obtaining for your business because they are usually more favorable to start up businesses. If you need more capital you can also apply for small business loans with your local bank or credit union. They will usually you might or might not need to have collateral backing depending upon the underwriting guidelines of your specific financial institution.
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Step 4
After obtaining start up capital from grants and lenders you can add to your business capital by liquidating your savings and investments as much as you feel comfortable doing. Start up capital needs need to be high enough to give your business a good chance of success but you should be careful not to extend yourself too thin either. If your business capital needs are exceptional you need help you can also consider liquidating alternative assets such as the physical items you may own (i.e. furniture, jewelry, investment property, second car, etc.).
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Step 5
Raising capital for business can also include taking out personal loans that you then reinvest into the business. If you need more capital take out various personal loans such as home equity loans or cash-out credit card transfers to fund your business start up. It is important to note however that taking out personal debt to fund the initial capital needs of the business can be extremely risky and should only be done with great caution.
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Step 6
Remember that as a last resort you can raise business capital by selling partial ownership in the business to investors through stock or ownership interest. Raising capital in this manner however should only be done if you are comfortable not owning the company 100 percent. Skilled investors will likely want to see your business plan described in step one and might have a say in altering it should they take an ownership stake in the company.
