Startup Toolbox

Because of the economic turns we’ve had over the past few years, financing is more difficult to get than ever. The economic experts all seem to think that the new marketplace will continue to be cautious when it comes to lending.

The following are some sources for funds that can be used for your business needs:

1. Personal savings – Many start ups rely on savings to finance their business. This is the most cost effective source of funding but you need to use wisdom. Don’t put your family’s future in jeopardy by blowing through your life’s savings.

2. Bootstrapping – This is a method of self reliance that is also very cost effective. Money produced is poured back into the company to avoid the need for outside funding. This also means that growth has to be controlled so that costs can be controlled, which in my view, is a good thing. Uncontrolled growth can create a whole host of problems.

3. Family and Friends – Oftentimes, loved ones can provide funds for a start up entrepreneur. However, proceed with caution; these relationships are the most important in your life.

4. Small Business Administration – The Small Business Administration has a loan guarantee program where, if you’re approved, they will guarantee a portion of your small business loan.

5. Bank Loans – This is a more traditional form of financing. Bank requirements have become quite stringent and you may have to supply personal assets as collateral.

6. Investors – Securing funds from an investor is difficult, but not impossible. An investor will provide funds, either their own (angel investor) or those from a managed fund (venture capitalist), for your business. In return, they often expect not only debt repayment but also ownership equity in your business.

Happy Entrepreneuring!

Katherine