How Can I Get Start-Up Capital or a Loan to Start My Small Business?

A small business has several ways to secure start-up funds.

Entrepreneurs may hold off on starting small businesses when they don't have enough start-up funds. If you are just starting out, there are sources for funds for your small businesses, whether you want to get a bank loan or try to secure venture capital.

Instructions

1. Apply for a business loan through a local bank or credit union. A good personal credit rating can be a substitute for established business credit. This is called a personal guarantee. Rates for these loans vary from bank to bank, and you will probably be required to send in your business plan with the application.

2. Apply for a loan through the Small Business Administration. A SBA loan is a government-guaranteed loan that is offered through commercial lenders. The commercial lenders actually give the SBA loans, and if there is a default they will recover the loan money directly from the government. There are a number of SBA loans designed for specific business needs. Because the loans are guaranteed by the government, lenders are more willing to extend credit to those who have less than ideal credit.

3. Apply for venture capital through the Small Business Investment Company (SBIC). This is a program created by Congress to provide additional funding in the form of venture capital to small businesses. This capital is applied for through local offices of the SBIC. It requires that you are a small business with under 18 million dollars of net worth and that you submit a business plan through the local office. The government oversees and regulates who can become an SBIC company, but the actual funds are provided by private, for-profit investors or investor groups.

References

• Small Business Administration: SBA's Investment Program
• Small Business Administration:
• Entrepeneur: Sources of Start-Up Capital