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Permalink Reply by SUp.biz, COO on August 19, 2009 at 11:41am

Here is a list of the ways businesses get money for the extras:

1) Business Credit Cards
The Google founders (Sergey Brin and Larry Page) maxed out their credit cards, and if you have good credit, may be your easiest option.

2) Savings / Retirement Funds
You can draw on savings. I can’t tell from your question, but if you have no full-time employees, you may be eligible to set up a Solo 401(k) (also called an Individual 401(k) or Self-Employed 401(k)). You can transfer the funds from your retirement accounts without penalty into the Solo 401(k) and borrow up to $50,000 or 50% of the balance (whichever is less).

3) Home Equity Loan
If you own a home and are confident in your business, this is a simple way to obtain a sizable amount of funding.

4) Government Loans
Check out www.sba.gov and www.score.org.

5) Lines of Credit
If you have a good credit rating, you may be able to secure a line of credit, which you’ll be able to use by writing checks against it or by using a credit card for that account. The line is usually revolving, such that the amount available to you is reduced as you use funds, and increased as you repay funds. You can use the funds as needed, and interest only starts to accrue when you use the funds. Typically, a bank will demand a personal guarantee from you.

6) Letters of Credit
This is different than the line of credit discussed above. Here, the bank gives a vendor a “letter of credit”, which is simply a written guarantee that the bank will pay a certain obligation if you fail to do so. You don’t receive or have access to funds unless you fail to make a payment, but letters of credit are useful in a variety of ways, including getting the hardware you need on a reasonable payment plan from a vendor.

7) Long-Term Debt
This is a loan that is over one year long. It can be unsecured, or secured by collateral such as accounts receivable or inventory. A loan secured by your accounts receivable is often a good option for young rapidly expanding companies.

8) Angel Investors
Your business might get funding from “angels,” which are wealthy people or groups of people looking to invest in an emerging business.

9) Venture Capital
If angels aren’t an option or don’t offer sufficient capital, you might explore venture capital. Venture capitalists will take equity in your company. If this is your first company and you don’t have venture capital contacts, it will be difficult to get a meeting. As a starting point, you will need to prepare a presentation and executive summary, then get a list of venture capital funds, identify those that make investments in businesses like yours, and choose the particular partners within the funds that more narrowly focus on businesses similar to yours. It is a challenging project.

10) Public Offering
You could explore a Small Company Offering Registration, which is a Q&A styled registration form, for sale of securities up to $1 million. See the Issuer’s Manual at http://www.nasaa.org/Industry___Regulatory_Resources/Corporation_Fi... for more details.

Best of luck to you.

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Permalink Reply by Gloria on August 19, 2009 at 3:56pm

Thank you! You are right I have no employees, and so-so credit. I will be looking into SBA and Score this week. If you know any Angels direct their wings my way please. Unfortunately my business is not considered a necessity in todays market. So I may be stuck for right now. Thanks for all of the info I have printed this out. My first request will be for $1,000. That may not scare my credit union too bad!

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Permalink Reply by Nascent Dynamics ( ) on August 21, 2009 at 4:42pm

Hey Gloria,

I've been looking into you and am interested in helping you. On a very basic level, there are basic expenses that go with starting a business, such as fees associated with business licenses, etc. Good question. Most of these are going to be covered as startup expenses, and that's a good question to refer to an accountant...a must for any legalizing startup. Now it would be great to say there are other ways of getting what you need together through some kind of startup grants or investment banks, but I really think people are on their own for the most part.

I noticed your question about putting together a website. I can tell you with some confidence, there are free options you could use to get started, which could help you generate some traffic and revenues. However, the key is going to be about you and what you do. For what you say you do, I think you need to at least put up some pictures. If you are serious, then perhaps working out all the details and marketing into a plan, brand message, and marketing strategy is what you need to do at this point.


Best,

Anthony Reardon
Nascent Dynamics ( ) Modern Business for the Modern Environment.

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Permalink Reply by Joseph Lizio on August 22, 2009 at 5:53am

Given you are a new busienss - just getting started - you must focus on bootstrapping. Personal credit cards, personal loans (if you have decent credit), personal asset based loans like home equity lines of credit or title loans. You can alsp approach friends and family for small loans or even take a loan against your retirement plans.

There are also micro-credit non-profit groups that will lend up to $25k for new businesses - these groups work with the SBA and great ways to get started on a small scale. Lastly, think about peer-to-peer social lending where members lend and borrow from each other. These are kind of like friends and family loans just on a much larger scale meaning that everyone in the network is your friend.

Best of luck

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