How to Find Business Start Up Capital

Utilize business development resources and banking relationships.

Business start-up capital can transform an idea into a workable concept that results in new jobs and a profitable business venture. Demonstrating experience, a need in the marketplace and sound financial management capabilities will help persuade and assure potential investors that providing a loan or investing capital will likely result in a positive return on investment. Continue fine-tuning the business idea while seeking capital.

Instructions

1. 

   Make the idea clear from start-up to exit plan.

   Look first to personal financial resources to find business start-up capital. Apply for an equity line of credit based on an asset like a home; review credit card balances and corresponding interest rates to budget for finance charges; then schedule an appointment with a financial planner to discuss costs of using money from a retirement plan, mutual funds or stocks. Speak with a mortgage holder to secure the best possible interest rate for an equity line of credit. Plan to meet with a local banker to compare interest rates and terms of repayment. Plan to use a portion of your personal finances to assure prospective investors that the idea is worth financial backing.

2. Visit a loan counselor with a business development center that is certified by the Small Business Administration. Present the business idea, then determine the potential eligibility for a micro-loan that may go up to $15,000, or for a Small Business Administration financing package for larger amounts. Attend a loan workshop at a business development center like the PACE BDC in Los Angeles, which states that "sound financial management [is] the primary means" for a business to demonstrate creditworthiness.

3. 

   Budget properly for cash flow.

   Apply to a peer-to-peer lending network, which will "remove the traditional lending institutions, instead allowing lending transactions to take place directly between individuals," according to author Mike Handelsman writing on Entrepreneur.com. Request a specific amount and interest rate, writes Handelsman, and lenders may fund all or part of the loan request.

4. Pitch innovative products or service business ideas to venture capitalists or angel investors. Work on a pitch that illustrates how the product or service meets a need in the marketplace that is currently not filled. Start the process to find venture capital through organizations like Perfect Business, which allows members to submit a "pitch" to investors and receive feedback.

5. Approach larger companies and even former employers. Propose that the new entity needing start-up capital act as a division or subsidiary of the larger company.

Tips & Warnings

• Demonstrate knowledge and expertise to assure investors.

References

• Pacebdcla.org: Business Loans: Loan Workshop
• Entrepreneur.com: Money: Financing: 4 Alternative Lending Sources
• Perfectbusiness.com: Pitch

Resources

• SBA.gov borrower guidelines