Diana Pemberton-Sikes

Article Summary:

Here's 10 ways to find business start up money.

Finding Business Start Up Money

You have an idea, you've done the research, you've finished the business plan, and you have an estimate of how much it's going to cost to get it all off the ground.

The next step? Finding money.

Don't let this be an obstacle to your dreams. Here are some places to look:

1. Savings and investments.
Depending on how much you're looking at, you may be able to pull the amount from savings, CDs, stocks, or bonds.

2. Friends and family.
This is a time-honored tradition in some cultures and could be the best way to go, depending on your situation. However, exercise caution: your finances might become grist for the family rumor mill and you might create friction if something goes awry.

3. Credit cards.
Again, depending on how much you need, you could use the cash advance line on a credit card as an unsecured line of credit (albeit an expensive one). Look for low interest rates and cash advance fees. A recent Arthur Anderson survey of small and mid-sized businesses revealed that nearly 50% of all small businesses use credit cards in some capacity to get up and running.

4. Bank Loans.
Frankly, bank loans are tough for startups to acquire. Usually banks loan money to companies that are stable and profitable or whose officers have a successful business background. They're not impossible, however. Make sure you have your business plan in order before approaching your banker.

5. Personal or Home Equity Loan.
Since bank loans can be difficult for first time businesses, you might try getting a personal loan using your personal property as collateral. That's where 20% of businesses find their start up funds, according to that same Arthur Anderson survey.

6. Selling personal assets.
If you have antiques, jewelry, collectibles, stocks, or real estate on your balance sheet, you might consider selling them to get your start up funds. A recent news story I saw reported that the antique jewelry market has seen a surge lately as more and more people sell unworn heirloom jewels to finance business start ups.

7. SBA Guaranteed Loans.
If you live in the United States, you might be able to get the Small Business Administration to back a bank loan. That means that while they don't loan money themselves, the Small Business Administration will, upon reviewing your business plan, help you find and secure funds from the private sector.

Outside the US, you might try your local Business Information Centers, Chambers of Commerce, Employment Development Department, or similar entity.

8. U.S. Government Grants.
Get startup money from Uncle Sam? Absolutely ... if you're a U.S. citizen. There are thousands of grants available for specific types of research, and it's how both Donald Trump and Ross Perot got their start. You'll need to dig a little, but you can find a comprehensive list of grants at:

The Catalog of Federal Domestic Assistance

9. Angel (Personal) Investors.
An Angel Investor is a person or entity willing to invest in your startup for a percentage of the equity. You MUST have your research and business plan done before you approach them. Typical investments stay in the five figure range.

An Angel's biggest concern? Getting his money back. Angels also tend to invest in things they understand or participate in, so approach people who are going to be the users, suppliers, or people within the industry or market area. Don't go after your technophobic lawyer to give you money for your mp3 idea, for example.

10. Venture Capital.
Venture Capitalists look for highly profitable, very fast growing, early to mid-stage ventures. They seek almost immediate returns on their money, which often include funds from wealthy individuals and institutional investors (i.e., pension funds) looking for a high rate of return.

Often, they'll want a lot of control, and will bring in their own people to "run the show." Venture capitalists really like "hot" industries (high-tech, Internet, etc.) and companies that are poised to go public.

Ready? Set? Go find some start up money!

Diana Pemberton-Sikes has been helping entrepreneurs turn their EXISTING knowledge, skills, and interests into cash since 1999. To learn how you can turn your "passions into profits", visit her online and subscribe to her FREE ezine at niftybusinessideas.com. Diana is also and author of "Wardrobe Magic," an ebook that shows women how to transform their unruly closets into workable, wearable wardrobes. For more information, visit her website, Fashion For Real Women.com.

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