Finding Start-Up Funds For Your New Business Articles | Entrepreneur

By: Matthew Hick

Staring a new business can be expensive. Small business loans are available nationwide, but don’t count on them alone to fund your new business venture. According to the Small Business Administration, banks usually require at least $20,000 in secured capital before considering any type of small business loan. Larger investments may require even heftier private funding.

Where savings fall short, many new start-ups rely on small investments from friends, neighbors and family members to generate necessary start-ups costs. Either offering investors a part of the business and future profits, or offering to pay back investments with interest within a set amount of time usually does this.

Home equity loans or lines of credit can be a great way to generate larger amounts of money fairly quickly. While home equity (or second mortgages), can offer large dividends for a fairly small payment; remember that these fixed rate loans are often long-term loans for 20 to 30 years in duration. Lines of credit, on the other hand, allow the borrow to take smaller amounts when needed, with a variable interest rate that is linked to the current prime, which could rise suddenly, making minimum payments escalate unexpectedly. Special care should be taken when using either of these funding options since personal property is used as collateral, making it vulnerable to foreclosure if the business venture fails and the borrower is unable to make the payments.

Credit Cards are a fast, easy way to get quick cash, but not preferred by lending institutions. Most banks frown upon the use of credit cards as a business-funding source, and may actually deny a business loan if a large outstanding balance is due.

Large capital needs may be met using an investor capitalist, a person or organization that looks to fund promising new start-ups for a future cut in the profits. These investors are eager to give money with few strings attached once an entrepreneur proves why their new venture has what it takes to succeed – and succeed big. To learn more about this option, contact your local Small Business Administrative or Service Corps of Retired Executives (SCORE), office in your area. Both offer free services and are a wealth of information regarding all aspects of starting and running a small to mid-sized business.

Private Foundation and Government Grants are rarely awarded to individuals, but are available for some minority business owners and non-profit ventures.. Finding this type of funding takes a bit of time and research, but both private foundations and government agencies offer a multitude of financial benefits for almost anyone willing to try something completely new and different, especially if it has the option of helping some forgotten segment of society.

Finding money to start your business takes tenacity, planning and confidence. But if you believe in your product or service, and have the ability to make others believe in your vision too, than the money will come, with patience and persistence.