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How to Get Start Up Money for a Small Business

by Yu Qing

Overview

Having your own business is a dream come true. You do not have to answer to a boss, and you can do what you love. Moreover, your efforts go into your own business and not someone else's. However, starting a small business is difficult and takes a great deal of capital. You need money to rent office space, build a client base and to advertise your business. Fortunately, there are some financing opportunities.

Step 1

Bring your business plan to loan meetings. Most lenders will want to know more about your business to decide whether they should lend you money. The key elements that a lender will consider are the marketing and finance sections of your business plan. Both should be realistic and show that you've done much research in your field.
Step 2

Go through the Small Business Administration. With SBA backing, you are more likely to be approved for a loan by a banking institution. The SBA does not actually loan money; it gives its guarantee as a government agency to possible lenders.
Step 3

Ask friends and family. Those who know and love you might be more willing to lend you money to start your business. However, do not take their kindness for granted. Set up a meeting with your friend or family member, and give them a copy of your business plan. Go over details and offer to answer any questions they may have.
Step 4

Apply for a microloan. A microloan is a small loan, which ranges from a few hundred dollars to hundreds of thousands of dollars. The SBA makes funds available to nonprofit lenders for new or growing small businesses. To apply, find a microlender near you by going to the SBA Web site listed below.
Step 5

Apply for credit cards. If the above options yield unsatisfactory results, credit cards are available, albeit risky, alternatives. Credit cards usually have higher interest rates, and credit limits can be lowered without warning. Most banks have credit card options for businesses. Consider meeting with a bank representative to go over your options. Find out if you have future opportunities to increase your borrowing limit when your business grows. Shop around different creditors and compare your options.

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Business plan
Business plan
Be thorough with the terms of your loan before signing a contract. Read the fine print on your credit cards and bank loans before signing, and have a lawyer draw up terms for a loan from a family member. This will help avoid financing troubles in the future.
Be thorough with the terms of your loan before signing a contract. Read the fine print on your credit cards and bank loans before signing, and have a lawyer draw up terms for a loan from a family member. This will help avoid financing troubles in the future.