Small Business Financing

Sometimes the only thing that comes between you and starting your own small business is the one thing we all wish we had enough financing. How do you get money to finance your small business start up? Lack of money isnt going to stop you if you're determined to find a way to get the funds to start your dream business. It really depends on how creative you can get with knowing where to look and who to ask.

Here are some places you can start taping into for your small business financing efforts.

Keep in mind that the easier funds may not be cheap but its an option. If there was a super opportunity in front of you, a few points difference in interest may not matter. For example: If you found a real estate deal for 50% of its retail market value do you honestly think that you won't find the money for it? People will be beating down your door to lend you the money.

Credit Cards
This is a good temporary source of funds if youre starting a small business and youre short a few thousand dollars. This is good for short-term financing and small types of business equipment and supplies if you plan to pay it off in a few months or less.

Home Equity Line
Generally you dont want to have your house at risk if youre starting your own business but if theres no choice then you should consider using your home equity as a springing board. This is also really easy to get, it seems like youre seeing a TV commercial or ad about banks competing to extend you a home equity line of credit everyday.

Friends and Family
Write out a full contract and note with an interest rate on it. Spell out the terms and make sure theres no gray area or parts where there could be a potential misunderstanding down the road. State when youre going to pay back the loan, and how much the payments will be. And how long is the note for? What is the interest? Is there any collateral or recourse if you dont pay? What is the exact day of the month youre going to pay by? Treat this like you would any other loan from banks or commercial lenders. You dont want to ruin your relationships because you think you can get away with paying late or not paying for a few months.

Venture Capital
These companies main purpose is to lend money and to make their money back plus huge profits in 3-5 years. They generally wont lend you money unless its over 1 million dollars and they get a percentage of your business stock and equity. If you have a great idea that you think you need to get mass marketed fast then venture capital is the way to go.

Angel Investors
Theyre a little easier to work with then venture capital. Angel Investors are wealthy people that lend money to small business owners or medium size businesses for 10-15% interest a year.

Hard Money Lenders
Hard Money Lenders lend money for real estate investment purposes. If you can purchase property at 70% of market value or less they will lend you 100% of the money regardless of your credit, employment, assets, etc. This will be a loan based on the propertys value and will use the property as collateral.

SBA Loan Guarantee Programs and Micro-loan Programs
SBA has great programs that will help you get the loans you need if youve been turned down for a business loan by your local bank. Go to their website for more information.

Here are some other creative ideas to come up with money:
--Garage Sales
--Sell books and courses you have thats gathering dusk on Ebay
--Go through your stamp, gold, art and other valuable collectors items to sell
--Take on some Gigs on the weekend for extra money. Examples: Work at convention, fairs, offer to do computer projects, sell crafts, etc. to make extra money.
--Baby-sit for extra money
--Scrap booking

Heres another idea:
If the small business you want to buy has been in existence for at least a few years, they may have assets you can use as collateral if the loan amount you need is equal to that or less. Sometimes owners are willing to sell their businesses for a lower price to get a fast sell and they may sell it for whatever the businesss asset values are. If that were the case then getting the money you need wouldnt be hard.

See if you can come up with a list of valuable collateral you can offer the bank or lenders. Do you have $25,000 in a CD not yet matured? How about the $100,000 in your 401k that you can use as collateral? Or the company stocks you have accumulated over the years? You can margin the stocks at the brokerage for 50% of what its worth and not have to sell the stocks. But the catch is, if the stocks go down, youll need to put more money into the account or they will sell your stock at the open market the next day.

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Fast Money Loan
Information about Home Equity Loan