I’m also a fan of bootstrapping your new business venture. Scraping up the money yourself and living on Ramen noodles while you grow and develop the next big thing is awesome. However, not all businesses can be funded this way. A lot of businesses, if not most, need a capital investment to get off the ground. Especially if you need specialized equipment or a physical location.
Where to get the start up capital is a big question for most new business owners. Here are some ideas:
This is probably your first stop. When applying for a business loan think of the business as it’s own entity. Often times a new business can’t get a loan because it has no track record. If the business is nothing but a business plan and your vision then it’s pretty hard to get a loan. You will probably be required to personally guarantee the loan, meaning if your business can’t pay it back, you will. You are basically co-signing for your business.
If your personal credit isn’t good enough to co-sign for your business then you can ask the Small Business Administration (SBA) to guarantee the loan for you. Basically, they co-sign for your business instead. This can be tough to do but if you can impress the SBA they may take you on.
You don’t have to get a loan to start your business, you can get investors. You will need to find and impress potential investors with your business idea. Investors will give you cash in exchange for part of your business. What’s great about this method of funding is that you don’t start out your fledgling business with debt and you may get a partner who can help out along the way. The drawback is that you give up part ownership of your business and may lose some control.
Each state has programs that will either grant or loan money to start ups. Your local Small Business Administration should have info about what grants are available to you and can help you apply. They may be tough to get but if you score one they are worth the effort!
As you can see there are a number of commercial finance solutions available for your new business. If you have a dream just keep working at it and eventually you will see it’s success!