Financing a Startup Business

No matter how great and unique your idea for a new business is, you won't get past the starting gate without funding. There are many ways to find money, but most are generally more appropriate for most established companies. Still, there are some smart tacks for start ups; there's money out there if you get creative. Here's a look at some options:

Entrepreneurs spend an average of close to $70,000 - $75,000 to start a business, and most of that money is provided by the small-business owners themselves.
Where do entrepreneurs find the money? While most part comes from personal savings and home-equity loans, they also tend to use (plastic), Credit Cards heavily. Possibly, half of all start ups are funded by the owners' credit cards.
Raise money from relatives - Friends and family come handy. At the very early stages of any start up, entrepreneurs also tend to raise money from relatives, colleagues and other people they know well.

Usually, friends & family financing is informal; you probably don't have to write a business plan for the transaction. But, no matter how well you know your early investors, it would be wise to draw up a contract to prevent any misunderstandings down the road.
Borrow from Banks. For most start ups, getting a traditional bank loan is a long shot, especially in today's economy. That's because banks typically will only consider companies that have been in business for two years, at least. Above all, they need to see a tangible asset that can be used as collateral.

Also try SBA - Small Business Association:

One possibility is to apply for a loan guaranteed by the Small Business Administration (SBA).
A bank is less reluctant to take on a company with an SBA guaranty. Even with that seal of approval, you may still have to pledge your home/personal property as collateral.
Look for Grants you might qualify for. If your venture is a technology business, you might be able to apply for a Small Business Innovation Research grant (SBIR).
That is a federally funded program mandating that certain agencies set aside part of their budgets to fund fledgling high-tech companies with interesting inventions they want to commercialize.

There also are a limited number of government grants for women and minority-owned businesses as well. One really good thing is: Competition for this money is steep. So, if you apply for the grant and win it, it's helpful for attracting funding from other investors.
Use Venture capital. Simply put, Venture Capitals rarely invest in start ups or even early-stage companies.
Still, if your company already has a track record and promises high returns, it's worth a shot.
Your best bet is to use your network to find a referral. Then, make sure you have an great business plan put together. You also have to be willing to give up control over major decisions and/or to sell your business at one point in time.
Find Angels. If you're further along in your development - you have a management team and, preferably, a product or service on the market that's of a high interest - you can try angels.
http://www.angelinvestors.net
They're private, high net-worth individuals who generally invest anywhere from $50,000 to $2 million in companies.
Who are they? most likely former entrepreneurs themselves, angels can offer not only money, they also can provide expertise and useful contacts.

How to find them? One avenue is to approach the growing number of angel clubs. These groups of private investors meet regularly to hear brief presentations from entrepreneurs seeking money and then, often, give money jointly to companies. to find them see link on this article!)

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