Finding The Money You Need

It is important to explore all of your financing options before making a decision; several sources to consider are:

• Personal Savings: The primary source of capital for most new businesses comes from savings and other personal resources. While credit cards are often used to finance business needs, there are usually better options available, even for very small loans.
• Friends And Relatives: Many entrepreneurs look to private sources such as friends and family when starting out in a business venture. Often, money is loaned interest-free or at a low interest rate, which can be beneficial when getting started.
• Banks And Credit Unions: The most common sources of funding, banks and credit unions, will provide a loan if you can show that your business proposal is sound.
• Angel Investors And Venture Capital firms: These individuals and firms help expanding companies grow in exchange for equity or partial ownership .

A source of venture capital is the SBA's Small Business Investment Company (SBIC) Program. SBICs, licensed and regulated by the SBA, are privately owned and managed investment firms that use their own capital, plus funds borrowed at favorable rates with an SBA guarantee, to make venture capital investments in small businesses.

Read the SBA's Venture Capital Primer For Small Business (Word document)

Additional sources of capital include:

• Credit Cards
• Customer Financing
• Employee Stock Ownership (ESOP)
• Home Equity Loans
• Mergers and Acquisitions
• Purchase Order Financing
• Strategic Partnering

Related Information On Additional Sources Of Capital 

Read the SBA's Financing for the Small Business (Word document)

Borrowing Money 

It is often said that small businesses face difficulty borrowing money, but this is not necessarily true. Banks make money by lending money. However, the inexperience of many small business owners in financial matters often prompts banks to deny loan requests. Requesting a loan when you are not properly prepared suggests that you are a high risk.

To successfully obtain a loan, you must be prepared and organized. You must know exactly how much money you need, why you need it, and how you will pay it back. You must be able to convince your lender that you are a good credit risk.

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