How to Finance a Business Start-Up

Video Transcript

"My name's Gary Marshall. I work for the Small Business Administration. There are many avenues of creative business financing available. While most businesses have a hard time getting a loan from a bank when they're brand new or just getting started, there are other options available to them. Alternative lenders such as community groups have a built-in interest in making loans available to businesses that are not viable to other regular commercial lenders, or not as attractive to other commercial lenders. Many businesses start up with money they get from their friends and family. Many businesses will primarily get started with money that they get from having their own personal savings. If you're lucky enough to own property, you could look at that as a source of financing. Get a loan against your equity in your home, and you're set. Credit cards are a good way to consider working out possible ways of getting money without going to a bank. And also lines of credit from a commercial lender, as opposed to a term loan. A lot of credit is more attractive to a bank than a term loan, because they often see that they have more control of the line of credit. They will--you'll apply for the line of credit as you would a loan, and then they will put the money into an account, and you'll draw against that as you need it, and pay it back as you're able to. Typically a bank will want you to pay down the whole amount within a year at least, but you'll have the flexibility of only paying interest on the amount you have taken out of the account, rather than interest on the entire amount at one time."