How to Fund a Small Business Start Up

Once you have a great idea for a business, it is time to make the transition to actually funding it and making it a reality. You do not need to be a large company to get business financing, as long as you know the right places to look.

•  Use your personal savings, credit cards or a home equity loan.  Although these methods are the easiest to come by, you have to be very careful not to accumulate too much personal debt for the benefit of your business.


•  Appeal to your amily and friends. Most capital for new businesses actually come from friends and family. Although this type of financing is relatively informal, you still want to draw up a business plan to show them that there was some actual forethought put into the business.


• Apply for bank or SBA loans. It is unlikely for a bank to give a loan to a company that is younger than two years old. In addition, most banks want to see positive cash flow first and require that the business put up collateral for a loan. By going through the SBA, these requirements will not be as strict.


• Look into business partnerships. You can recruit someone into your business that has some capital to help seed your idea. In exchange for the capital, they will require a portion ownership in your company. This is traditionally how venture capitalists and angel investors work, by exchanging funding for a piece of your company.