Securing small business financing may seem like an impossibility, especially if your credit isn’t perfect. But there are some small business funding sources that could provide the cash you need to get started. You just need to know where to look.
First you have to understand the basics about small business financing. Many companies will claim that they can secure a small business grant, but the reality is that there is no grant money available for starting a business.
Grant money is doled out by foundations to non-profit organizations that apply for funding. Grants are not related to small business finance in any way. If someone says they can get you a grant, then it’s probably a scam.
Small business financing generally takes the form of business loans. These loans are made for the purpose of starting a business, and they usually carry much lower interest rates than personal loans.
By far the number one source for small business financing is the Small Business Administration. SBA loans have helped thousands of people start running a business. The whole purpose of the SBA is to make it possible for people to go into business.
If you are a minority, and don’t forget that women are considered minorities in the business world, then there is a good chance you can secure a loan based on that. Many companies are looking to invest in minority-owned businesses. There is even a special SBA program designed to offer low business loans to minorities interested in starting their own business.
Financing a small business can also be done through one of your local banks. However, these loans might carry a higher interest rate than an SBA loan, and they may require that you put up some collateral for the loan.
You could even consider asking your friends and family members to invest in your business. There’s a chance they will help you out. Just be sure to spell out the terms of the investment or loan so that this doesn’t damage your relationships.
Now that you know where to look for small business financing, you have to know how to actually secure it. Most of the time you will be required to present a written business plan.
The plan should lay out every aspect of running the business, including everything from hiring employees, to marketing your business. You must show investors that you know what you’re doing.
It is recommended that you hire a professional writer with experience crafting business plans. They will know everything that needs to be included and can help put your ideas into words that sound professional.
Although taking out loans with interest is a reality for many to start a small business, you could avoid these types of loans altogether. There are other approaches to raising capital for your small business, which do not include interest bearing loans. These approaches are not for the people with a “Get Rich Quick” attitude.
One of these approaches is to initially start a legitimate home-based business. It sounds counterintuitive, but you could start one of the many offline or online home businesses with very minimal cost of a few hundred dollars or less. Such home businesses, if set up right, could be reasonably profitable. This would allow you to build up enough capital and not-to-mention experience to launch your next venture.
That said, interest free loans to start a small business do still exist. And so do small business partnerships with investors and financial institutions. The key is your willingness to work out a deal where you share a portion of your future earnings/profits when your small business takes off.
The point is, if you’re determined to get your small business off the ground, financing or the lack of it is no excuse to give up on your dream.