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How Can You Finance Your Startup Business?
Starting a business is a wonderful way to break out of the 9 to 5 mold and find success doing something that you love. However, before you can get that new business off the ground, you will need to find financing. You'll need capital for equipment, for payroll, to purchase or rent business premises, for computers, for supplies, for licensing requirements and much more. How do you attain this capital? Below, you will find several options that can help.
SBA – The SBA (Small Business Administration) is an excellent option for your needs. The 7(a) loan program, the 504 loan program and 7(m) program all offer benefits, though they all have different requirements and eligibility rules. For instance, the 7(m) program is a microloan program that is extremely beneficial for startup companies. The 504 program is used to purchase assets, such as property or a building to house your business and the 7(a) program offers very broad eligibility requirements.
Angel Investors – Angel investors are nothing more than individual investors willing to provide you with capital to startup your company. Angel investors can be tremendous assets to your needs, providing you with much-needed cash to get your company off the ground. However, angel investors often require a high return on their investments and should only be used if traditional loans are not available or insufficient for your needs.
Friends and Family – One of the most powerful sources of startup capital is your pool of friends and family. These people are the ones who know you best, understand your drive for success and will often lend you money to get started even if banks will not. Start with your closest family members and work outward towards acquaintances. The closer the person is to you, the more likely they will be to offer you a loan. However, remember that family loans can often lead to bitterness if your business fails.
Banks – One of the best options for your needs may just be your local bank or credit union. Applying for a business loan through a bank does require an arduous application process; however, it can provide you with the required startup capital that you need to get off the ground. Of course, you will have to do in-depth research on the various banks available for your use. Different banks have vastly different lending terms and criteria; do your homework and you will be rewarded.