Getting Money to Start a Small Business
With the unemployment rate reaching record highs around the nation, there is no better time than today to start a small business. Keeping costs low in the first few months will allow you to focus all of your finances to buying product or promoting your services. So, what do you do to get to the next level? How do you grow your business when you’re running low on cash? There are a couple of options available to you. From selling your assets to getting a loan from the bank, there are plenty of ways for business owners like yourself to raise capital.
Before getting in over your head, there are some things to consider. Do you want to take on a monthly payment when you’re first starting out as an entrepreneur or would you rather raise funds another way? Are you interested in a sole proprietorship or a partnership? Do you plan to conduct business online, through a brick and mortar storefront or both? How much money do you have to get started? Once you have determined these things, you will have a better idea of your needs and know how much money is needed to open your small business.
Come Up With a Business Plan
A well-written business plan is a necessity if you expect to receive funds from a lender. Banks want to see exactly what you plan to do with the money that they give you. Having it all mapped out on paper gives the institution a better idea as to how you plan to make your money grow and ultimately pay back the loan with interest.
If writing is not your forte, consider hiring someone with experience to help you with your business plan. Without it, few lenders will even consider hearing your ideas. Although it may be considered an expense at the time, a thorough business plan is worth every penny you spend on it. It can help you earn the trust of your banker which is important these days.
Approach a Lender for Help
Call or visit your bank and ask them what the requirements are for obtaining a small business loan. Depending on the lender, the process can be very easy or may be more complex. Make sure to bring in a copy of your business plan to go over with your banker. Explain in great detail what the money will be used for. Get a copy of the institution’s lending guidelines and review them before filling out the application. Zone in on the interest rate and make sure it is one that allows you to pay off your loan quickly. Do some negotiating when necessary. See what type of loan best fits your needs and your budget.
The Small Business Administration (SBA) also offers loans. If you do not qualify for a bank loan, you may be approved for one through the SBA. They have two to choose from. The first is the Basic 7(a) Loan Program which is used the most often and is available in amounts up to $2 million dollars. The MicroLoan Program specializes in loans for small business up to $35,000 dollars. You can find out more about each program and its requirements by visiting the SBA online.
Start Out Small and Work Your Way to Success
Many small business owners start their business on the side and continue to work their day jobs. This ensures that there is plenty of money to cover expenses from the very first day of operation. Once the business takes off and more time is required to run it, these savvy entrepreneurs turn in their notice with a smile on their face.
You can grow alongside your business. By setting specific goals and a realistic deadline to complete tasks, you are laying a solid foundation for your company. This initial trial and error period will allow you to work out all the kinks before leaving your 9-to-5 gig behind. It will also give you the start-up capital that you need. In addition to paying your bills, it is important to put away money for your business. That way, when the time is right, you will have everything in place to get started as an entrepreneur.
Apply For Grants
Different state development agencies offer assistance to fledgling business owners through grants. The money does not come without strings attached. Most business owners must match the amount given to them by the agency either through private funding or loans. Even then, every penny counts. Here is some information you might find useful:
Solicit Donations from Family Members and Friends
If all else fails, you can speak to your family members and friends to see if they will put up the capital needed to start your small business. Believe it or not, many people are eager to share your enthusiasm and therefore contribute in ways you never thought possible.
The website Kickstarter (www.kickstarter.com) allows people worldwide to pledge money online as a way of helping you achieve your dreams. The service is free and allows you to track your project’s progress from start to finish. This is a fast and easy way to get the word out about your business ideas. Project creators keep 100% ownership over their work and offer donor’s products and experiences that are unique to their project. That means that you won’t have to pay back the money that you raised. This type of funding platform is taking off and may be the way of the future for small business owners.
Finding funding is an important task of small business ownership. Without it, getting your company off the ground may seem impossible. Gaining the trust of your banker, a SBA lender, and your family and friends is important when you need start-up capital to get the ball rolling. A comprehensive business plan tackles all of the questions that might come up during the lending process and gives you a clearer picture of your future as a new entrepreneur.