You may have the dream of becoming an entrepreneur with a brilliant idea for a small business or an online business, but you need financial backing before you can get started. There are several ways to finance your small business and you can use more than one. The first thing you need is a good business plan. This will help you organize your thoughts, set goals, and any lender will want to see it. Your business plan shows that you are serious about your new endeavor.
If you have gotten your business past the start-up phase, you may be eligible for one of two loans offered by the Small Business Administration (SBA). These loans require a previous track record. There is a fixed-asset small business finance program and a guarantee small business loan that can be applied for at a bank that participates in the SBA loan process.
Family and Friends
Borrowing from family and friends is a good way to finance a small business especially at the start-up phase. It’s important to maintain a transparent financial policy in order to avoid damaging your relationships. The loans should be arranged in a professional way, so there is no question about how much is owed, if there is interest involved and when it should be repaid. Family and friends also appreciate a good business plan to see how you plan to proceed.
Home Equity Loan
If you have paid a substantial amount on your home mortgage, you’ll have equity in your home that you can use. An added benefit is the chance to refinance your mortgage to a lower interest rate or monthly payment.
Keep Your Day Job
Before your new small business is successful enough to support you, you can finance it with your salary from your day job or a part-time job. If your new business is considered a high risk business such as a startup, online gambling, travel or ecommerce, it may be difficult for you to find a merchant account provider. However, a high risk merchant account provider is available for businesses that have a higher than average risk of unstable customer credit cards. Your startup will be able to safely accept credit cards for payments, so your customers get the service they expect.
There is no reason for you to postpone your dreams of starting your own business and being successful. If you create a good business plan, you can approach several lenders for the money you need to get started.