Video: How to Finance a Business Start-Up

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One way in which start-up businesses are financed is through bootstrapping, which involves tapping into personal savings. Learn about getting investors to start up a business with help from the co-founder of a business advisory company in this free video on financing business start-ups.

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Video Transcript

Financing a business startup can be done a number of different ways. Probably the first thing that most people try to do is what they call bootstrapping whereby you tap into your personal savings, you use your credit cards, you might get a home equity loan, anything you can do to raise cash of your own is typically the first thing people will do to start a business. From there you can try and talk to friends, family, see if they're interested in investing in your venture. I would caution you to be a little bit careful with that if there is any doubt at all that this thing is going to go, you may not want to alienate your friends and family so at the very least put everything in writing so everybody knows what to expect if you go that route. Another option is to go to the banks. Now if you are a start up operation I can pretty much tell you that the banks probably won't be able to do much for you. They are usually looking for you to be in business for two or three years, have some collateral to put up, that sort of thing. You may be able to get an SBA loan through the bank or what they call an SBA guaranteed loan whereby the SBA would guarantee 50 to 75% of the loan. That makes it a little more palatable to the banks if you've got a good business plan, you're going to have to have some of your own money to put down, 20 to 30% probably to put down at least but sometimes you can get it done that way.

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How to Finance a Business Start-Up

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