Money to Help Fund My Small Business
One of the greatest challenges to succeeding in your small business is finding enough funds for start-up or subsequent expansion. New entrepreneurs especially struggle to raise the capital they need without a proven record of success. However, by considering every possible source of funding and persisting until you find what you need, you can finance your small-business dreams.
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Self-Financing
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The easiest source of funding your small business is you. If you have significant savings, equity in your home, an investment portfolio, a 401(k) or other retirement account or ample credit cards, these funds will be the most readily available funds you can find. There are no application fees, no financial information needed and no outside approvals to persuade and wait for.
Family and Friends
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Your family and friends are the next most-available funds for your small business. Family and friends care about you and your success, and thus may be more easily persuaded to lend or invest in you than strangers would be. What's more, their lending or investment terms such as repayment dates and interest rates are typically more lenient.
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Your Extended Network
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Your extended network may include any number of people who would be willing and able to provide small business funds. Contact anyone within your reach who has the means to invest in your and your business. Contacts in this group will require persuasion, so be prepared with a business plan and financial information to help you make your case. Expect to haggle over details and to have a written loan or investment agreement.
Traditional Lenders
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Traditional lenders do fund small businesses, though the requirements for a business loan may be difficult to meet. Business loans are made on the basis of assets available, previous track record, professional references and a rock-solid business plan with well-researched, verifiable financial projections and estimates. Start with a lender you already have a good relationship with, and cultivate your loan officer's help in creating a business loan plan that can be approved.
The Small Business Adminstration
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The Small Business Administration makes loan guarantees to participating banks to encourage small business lending. Though SBA loans require a lot of paperwork and can take considerably longer to get approved, they do empower small businesses without the means to secure a traditional bank business loan.
Angel Investors
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Angel investors are individuals or groups who invest in small businesses with the intent of profiting when the business is successful. Most angel investors are savvy business people with a nose for finance, and they will consider your opportunity with an objective eye for profit. You can expect most angel investors to question you thoroughly and to evaluate your business plan without your emotional enthusiasm. Selling a portion of your business will most likely be the cost of securing angel investment.
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- Photo Credit giving money image by Vasiliy Koval from Fotolia.com
