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The Start-up Business and financing
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There is a huge debate with regards to obtaining funding to start your business. There are so many companies wanting to “give” you money to start a business, however is it the right answer to launch your business in debt? You must explore the options with their pros and their cons before jumping into a small business loan.
With so many options to launch a business for a small fee why would someone want to get a business loan? Some businesses may require equipment or a building to store product, some businesses just want to have cash on hand. Today the process is a little more stringent and the requirements a bit more challenging. One of the best resources for a small business loan is to visit http://www.sba.gov/smallbusinessplanner/start/financestartup/index.html this is a tool loaded with information to help you understand the guidelines and process.
The negative part of securing a SBA loan is something was to happen to your business you would be personally liable to pay it back even if the business goes bankrupt. A recent client received a call after loosing their business two years ago from the SBA collection department and they were told that their children would be held responsible to pay the debt down the line. An SBA loan is not bad just count the cost and chains attached to it; try to explore other options first, especially today.
Another option would be to research available grants for start-up businesses or minority businesses. A great site to visit is http://www.grants.gov/ this site also offers great information on the grant process and the start-up business. In order to apply for a grant you will need a full business and financial plan, they want to see the value of what you will be offering along with sustainability. You may want to consider checking out a community grant writing classes usually offered by the county or CAP (Community Action Partnership), these classes are generally at no cost to you.
One final source for funding is a Venture Capital funding source. Venture capital (also known as VC or Venture) is a type of private equity capital typically provided for early-stage, high-potential, and growth companies in the interest of generating a return through an eventual realization event such as an IPO (Initial public stock offering) or trade sale of the company. Venture capital investments are generally made as cash in exchange for shares in the invested company. You could think of a VC partnership like the program “Shark Tank” on television today, they invest in you with the expectation on a ROI (return on investment). If you decide to explore this option check out the VC source thoroughly, just a word of advice.
The exciting part of starting a business today is that you really do not need a lot of funding if you utilize the internet. Most businesses today do not require a brick and mortar to exist, so do your homework understand your options and know your direction before you launch yourself into debt.
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