Where can I find sources of finance for small business startups?

Posted on May 23, 2008
Filed Under Business tutorials

Many people keep sending e-mails asking this questions… so let us try to discuss it a bit…

Typically, you get funds for your business from the following sources:

- Your own savings or resources (bank accounts, stocks, bonds, or even 401Ks)
- Credit cards — an expensive source of capital, but common among small business owners because they are easy to get
- Bank loans: only if you have collateral, equity investment, solid experience in the business and business plan
- SBA loans: same requirement as bank loans, but more paperwork
- SBA Microloans – if you need $30K or lower http://www.sba.gov/services/financialass…
- Grants: only if your business falls under Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) programs http://www.sba.gov/aboutsba/sbaprograms/… . Check Grants.gov http://www.grants.gov
- Angel investors and venture capitalists – if you need $500K and up and your business can post returns of about $50 million or up in 5 years

I suggest you read the following books to get ideas of how to finance your business:

Financing Your Small Business http://www.amazon.com/exec/obidos/ASIN/1…
Small Business Financing: How and Where To Get It http://www.amazon.com/exec/obidos/ASIN/0…
Financing the Small Business: A Complete Guide to Obtaining Bank Loans and All Other Types of Financing http://www.amazon.com/exec/obidos/ASIN/1…
The SBA Loan Book http://www.amazon.com/exec/obidos/ASIN/1…
Angel Capital : How to Raise Early-Stage Private Equity Financing http://www.amazon.com/exec/obidos/ASIN/0…
Financing Your Small Business (Barron’s Business Library Series) http://www.amazon.com/exec/obidos/ASIN/0…

and don’t forget that no lender or investor will talk to you unless you provide them with a valid business plan. Go to http://www.sba.gov , http://www.score.org or http://www.bplan.com for sample business plans and instructions on how to write a business plan.

Then, go to http://www.score.org/ and in the upper left hand corner, enter your zip code. On the next screen, you will get information on the nearest SCORE chapter. Call them and arrange for a free meeting with a SCORE counselor to review your business plan and discuss various loan options available to you.

SCORE is a nonprofit association dedicated to entrepreneur education and the formation, growth and success of small business nationwide. SCORE is a resource partner with the U.S. Small Business Administration (SBA).

SCORE has 389 chapters in locations throughout the United States and its territories, with 10,500 volunteers nationwide. Both working and retired executives and business owners donate time and expertise as business counselors.