Money to Start a Small Business in the United States
Affordable technology and the Internet make it possible to start more types of businesses with less money. Calculating your exact start-up costs is the first step in finding money to start a small business in the United States. Start-up capital can come from personal savings, asset sales, relatives, friends, even total strangers over the Internet. Government-backed lending institutions might also help you.
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Your Assets
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According to Entrepreneur.com, "Self-financing is the number-one form of financing used by most business startups." It's possible to start certain types of businesses on shoestring budgets of just a few hundred dollars. Consider withdrawing money from a savings account or mutual fund to invest in your business. Can you sell possessions to raise money? Can you start your business from home to save money? Do you have a credit card that can cover your start-up costs?
Private Investors
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According to "The Wall Street Journal," "The reality, for most startups, is that the investors most likely to provide capital for your business are people that you already know." Potential investors might require from you a solid business plan and good credit history. Approach your parents, friends or former boss as potential investors as they may put you through less scrutiny than lending institutions and give you more favorable terms.
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Lending Institutions
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Banks and credit unions might offer you loans backed by the government. Lenders often require from you a solid credit history, collateral such as home equity, and your own financial investment in your start-up. According to the U.S. Small Business Administration (SBA), "Most banks want the owner to put in at least 20 to 40 percent of the total request." The SBA offers a micro-loan program that backs business start-up loans of up to $50,000.
The Internet
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Sites such as Kickstarter provide crowd-funding opportunities that allow you to post your business funding needs and elicit micro-investments from dozens or even hundreds of people. Other sites such as Prosper are established peer-to-peer lending sites that allow you to post a listing asking for a personal loan for business use from any interested members who make their decision based mainly on your credit history and credit score.
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