Startup Business Funding - Getting the Cash to Start Your Business

Startup Business Funding: Lots of people come up with good ideas for a potential business, but many of those people never take their ideas to the next level and actually start that business.

If you’re finally ready to actually make your dream a reality the first hurdle to overcome is startup funding. No business gets up and running without incurring some costs. Fortunately there are loans available.

You’ll be looking at two basic forms of new business startup funding: debt financing and equity financing. Debt financing is a traditional loan. You borrow a certain amount of money and agree to pay it back over time usually with a set repayment schedule. You’ll owe the lender the money regardless of whether or not your business venture is successful.

Equity financing is when you sell a certain degree of ownership in your business. With this form your investors would lose money should your business fail, and will get more money should your business succeed.

With equity financing investors are taking a big risk by giving you money which means they’ll sometimes be much more involved with various aspects of the enterprise. They may offer advice and provide connections to help the business thrive.

Often people will invest for a short period of time…ideally they want to get their money back with interest in that time frame and may push for issues you don’t want because you’re in the business for a long time.

Bank loans are available for a huge array of needs and amounts. There are microloans for small amounts of money as well as the six figure loans. If you have any assets to use as collateral it’ll be much easier to obtain startup business funding. You will definitely want to try to secure a guaranty from the Small Business Administration (SBA).

The SBA provides 80% guaranty for loans under $100,000 and 75% for loans over that amount. Having an SBA guaranty speeds up the process of getting new business startup funding which can often be a lengthy process. Your local branch will be able to help you fill out the paperwork and determine which type of loan would best suit your needs.

Before you start the process of securing startup business funding you will need to determine exactly how much money you’ll be needing…and then double that amount.

The biggest mistake that most startup business people make is underestimating how much it will cost. The rule of thumb is that you will need twice the money you think you will.

Talking with a representative of the Small Business Development Center (SBDC) will be worth your while. They’ll be able to sit down with you and help you realistically figure out how much money you’ll be needing and will work with you throughout the application process.

There are lots of options available for startup business funding. It’s just going to be a simple matter of you taking the time to do a little research and getting everything organized.

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