If you’re an entrepreneur or a small business person one of the first tasks you have to accomplish is finding money for starting a business. There are several options depending on how much money you need.

For a few thousand dollars, consider using your credit cards or obtaining a new credit card account to fund the business. Use that card only for your business and you’ll have a way to keep track of your expenses as well.

Another avenue for finding money for starting a business is to use your home equity loan, especially if you need, say $5,000 to $10,000. The interest rate on home equity loans are usually much lower than credit cards, but be careful. If you can’t pay the money back or make the additional monthly payments you could lose your home.

Look towards the heavens if you need an angel investor. Angel investors are private wealthy individuals who invest from $50,000 to $100,000. Most of the time the company they invest in is high tech and looking at a fast growth period. Angel investors will become involved in the day-to-day management of your company so keep that in mind.

Venture capital receives a lot of press and does invest billions of dollars, but, and it’s a huge but, only about 20% of the companies receiving venture capital are start ups. The average investment by a venture capital firm is in the millions, so it’s not appropriate for small businesses. Less than 1% of companies seeking venture capital successfully obtain it, that’s only about 4000 companies per year.

You might consider alternative sources of financing such as obtaining inventory through consignment, royalty financing, trade and barter or purchase order financing.

Many small businesses think that a grant from the government will be their saving grace. Unfortunately there are very few government grants available for businesses. Those that are awarded, are done on a competitive basis to established companies usually in the medical or technical fields.

However, grants or very low cost loans, are sometimes available through cities and states for the purposes of urban redevelopment, in blighted neighbor hoods or to increase employment.

Money for starting a business can be found in a number of places and should be one of the first tasks an entrepreneur should complete.

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Very few people can afford to start a business using nothing but the money they’ve got lying around in their bank accounts. For most of us, we’re going to need to get a home business loan before we’d have anywhere near enough money to invest in starting up.

Your Credit History.

You might not have realised that your credit history was going to count here, but it does. This is where all those late credit card payments come back to bite you. The better your credit history, the more likely a bank is to lend you money, and the better the rate it offers will be.

Bank Loans.

Banks usually have someone whose job it is to go through applications for business loans. These people have seen a thousand business plans, and they know what they’re looking for.

Take along all your plans and any other supporting material you can put together. Make sure you present yourself at your most professional. Act like the most sensible and level-headed person you’ve ever met. This is, essentially, a job interview: the bank is interviewing you and your business to try and figure out whether it would be a safe place to put their money. Remember that they’re just like every investor, lending you money with the expectation that they will get it back, plus interest.

Secured Loans.

Of course, you’ll probably have a much easier time persuading a bank to lend you money if you put up something of your own as collateral in case you can’t pay the debt back. Some dodgy banks would really like you to secure your business loan on your house, since they know that the failure rate of start-ups is high and they’d really like to get their hands on it. Be cautious, in case you sign your life away. It is almost never worth starting a business if you can only get secured loans – you’re tying the business’ fortunes too closely to your own.

Government Loans.

As part of the push to support small businesses, there are now many government bodies that will offer no-interest or low-interest loans to small businesses, a category which includes home businesses. The government will obviously be even more picky about your business plan, but it’s still a good option to have available to you. Even better, these loans will often come with free help and advice from the agency that issues them, as well as all sorts of booklets and leaflets telling you the technical details of getting started.

Credit Cards and Overdrafts.

These forms of debt are a very bad idea. Whatever you do, do not finance your business with personal debt. You’ll have to make a massive profit just to pay back your debts, and it’s unlikely that you’ll manage to both pay them off and have enough money to live. If you can’t get a loan, try to find other investors instead.

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