For an entrepreneur planning to open a new business, finding sources of small business financing is job number one. Fortunately there are a number of potential sources for financing a small business. Unfortunately, some are easier to access in a timely way than others. Learning the small business finance basics will help your team sift through the information about potential providers of small business financing.
Small business financing is an important economic activity in the U.S. Financing companies, banks, government entities and non-profit organizations are all part of the incubation system that provides financing solutions for small business. Qualifying for funding differs with each of the small business financing solutions. Some require specific documentation, while others have ownership or product parameters. To find small business start-up money for your firm, assess the following sources:
1. Check with small business loan brokers.
2. Contact small business financing companies.
3. Consider grants among your small business financing solutions.
Find small business loans for start-upsAs your first source in small business finance basics, your business might want to apply for small business loans. Banks and other financial institutions are the leading small business lenders. Although interest rates and qualifications for the loans vary, most sources provide financing for a business that qualifies. Shop banks until you find the right combination of interest rates and qualifications for your company.
Compare rates among small business financing companiesOnce your team has researched bank loans, check with financing companies. Many are in business specifically to provide money for small business loans. Often they also will help with other aspects of starting your business, such as filing the proper paperwork and registering your business. Some but not all limit lending based on specific guidelines, such as to women-owned businesses or start-ups in a geographic area.
Get a grant for your small business fundingGrants can be an ideal source of funding for your start-up. The big advantage: your company doesn't have to pay the money back. However, there are some things about grants to consider. Grants are often competitive and might entail a detailed application process. Also, many grants take as long as a year or more to be finalized. Apply if your business qualifies and fits the grant time frame.
U.S. Small Business Administration website for complete information on grants. Your staff can find information on a variety of grant types and sources. For information on small business grants for women and women-run businesses, see Women's Business Grants from Womens-Finance.com.
- Don't overlook local grant sources. Cities or other government agencies seeking to attract certain types of businesses or companies to targeted areas can be an important source of funding.