About Money for Starting a Small Business

By Alicia Bodine

  • Overview

    About Money for Starting a Small Business
    To begin a small business, a person needs to put together a plan. First, she must fully research the idea and whether there is a market for it. Second, she puts together a business plan that includes all of the start-up capital needed as well as anticipated income and expenses. Finally, the owner will need to secure financing in order to start the business.
  • Significance

    Almost all small businesses need money to get started. Many towns are highly dependent on small businesses to provide jobs and much-needed services. Because small businesses are needed, an entrepreneur can find many outlets for obtaining the financing to get started.
  • Types

    There are a few different types of financing a person can utilize to get the money she needs to start her business. A loan is the most common way to obtain start up capital. Loans can be applied for at almost any bank. The owner will need to have a good credit score and be in good standing with the bank. Also, there are a lot more grants available to first-time small business owners than there use to be. Grants are great because you don't have to pay them back. Private lenders charge less interest than banks. They are a great option for obtaining financing. Family members may be willing to chip in if you have a solid business idea.

  • Size

    The size of the loan or grant that you need depends on your particular small business. Some businesses need more start-up money than others. A detailed business plan will help you figure out exactly how much you need. A plumbing business may cost $80,000 to get started, while a bookkeeping business may only need $5,000. Don't forget that you can also break up the amount of money you need and get a little from each source until you have the full amount.
  • Time Frame

    You are going to want to give yourself some time to get your financing. You can sometimes find out the results of a loan application in a matter of a few weeks, but grants can take months. You will also need to account for the time it takes to gather the necessary paperwork together. From the time you begin your business plan to the time you open up your business, it should take between six months to a year.
  • Warning

    It is very important that you fully examine whether or not you can pay back the money you borrow to begin your business. If you don't have a solid repayment plan, you could lose everything. A judgment can be made against you in a court of law if you default on your loan. The lender can then put a lien on your house, car or anything that you own. You don't want to end up having to declare bankruptcy after you went through all that trouble to get your business started.
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