How to Get Cash for a Small Business Start Up
In the past, the main sources of cash for new businesses came from bank loans, savings and other personal resources. In tough economic times, these traditional sources can be scarce. According to the Small Business Association, fewer small loans are given to new businesses. More than ever, creativity is essential to finding cash for a small business start up.
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Instructions
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Write a sound business plan. Describe your business, budget, marketing plan and management structure in 10 pages or more. Support your summary with documents and planned growth projections. Answer tough questions about your business operations. Know the economic state of your industry and why you think your business is worth the investment. Include a cover page with the business name, industry and contact information.
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Research peer lending websites. These sites match qualifying borrowers with everyday people who are willing to give loans to new businesses. They tend to offer better interest rates than banks, almost 50 percent less in many cases. An average credit score of 660 and above is often required for approval.
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Mine your associations. Get money up front for your product or services. Your existing customers may be willing to fund product development if you agree to customize a creation for them. Current clients might pre-pay for your services at a discounted price.
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Apply for a grant. Small Business Innovation Research grant is a federally-funded program, where certain federal agencies set aside part of their budget to fund new inventions. Specific government grants are available for women and minority-owned businesses.
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Enter a business plan competition. Held at university business schools, these competitions are an excellent way to get your small business in front of potential financing sources. Large cash prizes are also awarded to the winning business plan. Student participation is usually required although non-student team members are allowed. Contact colleges with prominent business schools, like Harvard and the University of California, Berkeley campus.
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Tips & Warnings
Competition for grant money is very steep. When you win a grant, it helps attract funding from other investors.
Business plans keep you on track by reminding you of where you started and what your profit goals are. Review your business plan at least once every three months.
Avoid scams. Always have a business lawyer review any financial contract before signing.
