Funding For Your Small Business

One fine day, you decide to step out of your routine 9-5 job and become your own Boss. You initiate plans to set up your own small business funding venture, locate the area where you will set up the business, and put down in black & white a concrete business plan. Gathering up all the relevant documents, with a nice PowerPoint presentation ready on a CD, off you go to find someone to help launch your business.

Its not so easy as you think. The small business funding you require sometimes seems like a mirage so near but always out of reach. Exactly where will you go and whom will you approach for funding your grand venture This article aims to give you know-how on some of the avenues that are open to you for funding your business.

First and foremost, find out how much funds you presently have and exactly how much you are likely to need for the initial start-up (and later development) of the business.

Your Core Group: One way of raising money is borrowing from your family members and relatives, provided, of course, they are willing to do so and you need small funds! You cannot literally go around approaching all and sundry with a collection box, pleading with them to chip in!!

First of all, give careful thought as to which of this close group (close to you, that is!) can really be trusted. That cousin with whom you are best buddies could be someone who does not wish to entangle his personal feelings for you with the nitty-gritty of business. This tends to be the general case in most relationships with those whom you love and care about. So, just like packages with the tab Fragile-Handle with Care, you need to deal with them, as funding sources, with gloves. At the outset, make it very clear that the amount you borrow from them is a loan that you will definitely repay.

Your Friends & Ex-Colleagues: As with family members, friends too may be the first individuals you turn to for funds. While studying for your MBA, you probably had a group of friends who formed a study circle. They are now scattered, each in their own career, but you have kept in touch. Dig out your phone book and call them up personally. One of them may just help you out!

You can also approach the individual with whom you shared a cubicle in your earlier office and who himself left a year earlier to launch his own venture. Of course, he should be a trustworthy guy! He may be willing to not only share his knowledge of starting and developing a business, but also may be agreeable to lend you a helping hand by way of funding.

Whomsoever you decide to approach amongst your close acquaintances and other contacts, remember: Put down on paper a precise agreement of the loan. Explain in simple terms the nature of your business and how and when you expect good revenues, as well as the possibilities of something going wrong down the line.

Your Personal Goods: Since you are the proprietor of your personal belongings, you are free to put them up for sale. That beautiful Kashmir carpet decorating your living room floor, those coffee-table books on racing cars, the miniature chess set on your mantelpiece, the bicycle in your garage all these & more are bound to have buyers. Sit down & make an inventory of things you would be willing to sell and youd be surprised at the number of items in your house that you dont really need!

Moving on to the bigger things that you own, you can consider selling your two-wheeler or your automobile. You can then take wheels that cost less, on a leased basis. Experts also advise taking a loan against your house, but not spending it entirely at once Ensure that you save a portion of the loan amount for paying up the monthly installments.

Useful Link: http://www.decision-finance.co.uk/personal_loans_guide.html

Your Business Paraphernalia: The small business you are starting will probably require equipment such as a photocopier or a fax machine. Instead of purchasing these outright, it would be advisable to take these on lease for a particular period of time, after which you can buy them from the firm that leased it to you. However, it is difficult to obtain a lease that is of a very large amount. Also, look around for the best deal by enquiring at two-three places before making a final decision.

Your Local CDFI: The Community Development Financial Institution in your area is a great avenue for funding when you are just launching your small business. It generally provides a loan if you are decisively able to establish the fact that your business will create positive gains to the community in the area. Supposing, for example, you decide to set up a toy shop and the young customers crowding your premises also creates an excellent customer-base for the nearby pastry shop and kids library- well, its a slam-dunk all the way! Your one business has the cash registers jingling merrily in the locality!

A Bank: This avenue as a source of funding is the one of the most common ones down which a small businessman steers for financing his venture. Although the larger banks give loans for those needing expansive amounts, there are some small and mid-size banks from which you can obtain a business loan for amounts lesser than $100,000. Such micro loans, as they are called, are just what you need for starting up your small business.

If you need a loan for amounts larger than $100,000, the Bank is likely to make a more detailed examination of your financial status than if you were to apply for a smaller loan. They will check your credit history thoroughly and ask exactly what collateral you can provide. Just remember that it is also important to provide a personal guarantee to the financier, which assures him that you are serious about your small business funding and will try best to ensure it is profitable.

A bank that is under the umbrella of the Small Business Administration (SBA) will give you a long-term loan for up to 10 years. The SBA loan is especially great when you do not possess sufficient personal goods to give as collateral. It usually takes just three days to process your SBA loan application.

There are also Community Banks that offer loan schemes to small business fundingn that are more adaptable than those provided by larger banks.

Tip to obtain Funding: Open shop and start your business on a small budget. There is no better way to attract someone to source your funds than by proving your entrepreneurial abilities.

Some Sensible Advice For Your Small Business Venture:

Employ an efficient Accountant to handle your business finances.

Acquire the services of a legal expert to give the know-how on the nitty-gritty aspects of business laws, licenses and loans.

Some Friendly Advice: Do not be disheartened if the very first door you knock at for funding remains firmly shut. Keep knocking at more doors - someone, somewhere will open that door. Just dont lose hope.