Small Business Financing – Finding Capital For Your Business

Starting a small business is an exciting adventure. From writing out the business plan to executing the minor details, the thought of being your own boss is thrilling to many people. However, not everyone who wants to begin a business has the funds available to make their dream a reality.

The good news is that because the government wants to see small scale businesses continue to grow and thrive, there are many financing options made available to those interested in becoming an entrepreneur.

- Grants – Perhaps the most appealing way to begin a business would be for free, and grants do not have to be repaid. However, the application process is quite intense, and the competition for funds is extremely fierce. Therefore, it is best not to rely on grants as your sole source of capital.

- Micro and SBA Loans – Micro loans are loans of amounts from $5,000 to $35,000 that can be used for any business purpose. If a loan is made to a small enterprise by a private sector lender such as a bank, they can be guaranteed by the SBA.

- Franchise Financing – If your business dreams include the purchase and operation of a franchise, you may be eligible to apply for specialized financing. Franchisees operating certain well known businesses are the most likely candidates for this type of financing.

- Development Financing – Businesses in need of capital for the development of land or buildings may be able to receive special financing with a long term and fixed rate program.

- Personal Loans and Equity – Finally, you can also seek help from friends and family by requesting a personal loan. Be prepared to have a detailed business plan. It is also recommended to have a formal contract written up to avoid legalities between loved ones. Alternatively, if you have equity in your home that you can withdrawal, you may consider writing yourself a check to begin your new enterprise. These options should be used as a last resort.

Finding and securing funds to begin your small business doesn’t have to be a daunting task if you know where to look. Some options will be more viable than others for you, depending on the business you are starting or the capital that is needed. Keep an open mind and a steadfast attitude, and you are sure to find the answer that best fits your situation — and business.