How to Finance a Business Startup

Get the financing you need to start your business.

Starting your own business requires time, planning and financing. In order to get your business off the ground you will need startup funds, and you will need continuing investments as your business grows. When you are creating your startup financing plan, keep records of the people you talk to and the things you learn for use later in your business career. But in the beginning you will need a good plan to secure your startup financing.

Instructions

1. Develop a business plan that outlines how much money you will need to start the business, in what areas it will be spent and the basics of how the business will operate. You can use this business plan as a budget for determining how much startup money you will need, and it can also be something you show to investors who ask about your business.

2. Analyze your personal finances to determine how much of your startup funding you can provide yourself, including personal savings and retirement accounts. Cut back on personal expenses such as cell phones and cable television to save money for the business and work extra hours if you currently have a job.

3. Develop share sales agreements with an attorney that you can use to sell shares of your company to investors. Begin with friends and family that may be interested in investing, and then speak to other business investors such as venture capitalists.

4. Contact a bank that works directly with the Small Business Administration to talk about getting am SBA-backed loan. You will deal with the bank, but the paperwork and information goes to the Small Business Association for approval. Submit your complete business plan with your application.

5. Fill in the remainder of your startup financing needs with bank loans and credit cards. Begin with bank loans and get the lowest interest rate you can. Credit cards should only be used as a last resort.

Tips & Warnings

• The interest rate on a standard business bank loan will be high. which is why you should pursue every other financing avenue before talking to a bank that is not affiliated with the Small Business Administration.

References

• "Inc." Magazine: Where Do You Go?
• CNN Money: 7 Great Ways to Finance a Startup
• Small Business Administration: Finance Start-Up

Resources

• "Entrepreneur" Magazine: Startup Financing