3 tips to come up with the cash to fund your business
The average startup cost for a small business is about $30,000, and many ventures require more than the average. But even $30,000 can be a challenge to raise. Here’s how to fund your entrepreneurial dream:
Come up with a plan. A solid business plan will tell you how much money you need. Luckily there are some resources available to help you craft your strategy. America’s Small Business Development Center (877.873.4567) offers a variety of services, and the U.S. Small Business Administration posts articles on starting and managing a small business.
Look into loans. There are several loan options available for funding small business startups, but you’ll need to come up with anywhere from 15 to 30 percent down to qualify. The first thing the loan officer will ask is whether “you have skin in the game,” or “how much of your own money are you going to put into the project?” says Independent Bank’s Matt Reinbold, Vice President of Commercial Lending in the Great Lakes Bay Region. Other options include U.S. Small Business Administration loans (e.g., SBA 7-A guaranteed loan, SBA 504 loan, or SBA Express guaranteed loan) or a Michigan Capital Access loan, designed for potential businesses that could have an issue with collateral.
How to find other financing. “A lot of times folks don’t have the cash flow or an existing job to get them started, and that’s when we look for alternative financing sources such as grants, loans from friends and family, and other enterprise capital that’s out there,” says Reinbold. Even crowdfunding on a website, such as Kickstarter.com, could be a potential avenue for coming up with money.
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