How Can I Get Money to Start My Own Business?

Here are a few options for finding funding sources for a new business:

Grants
Bank or SBA Loans
401K Plans
Credit Card or Trade Lines

Grants

Believe it or not, there are an abundance of grants out there for people who are interested in starting their own business. These grants have been set up by the government to provide adequate funding (whether seed money, start-up cash or expenses) for people who are just starting their own business.

Grants are sorted by category, by federal agency or under Recovery Act Opportunities. For more information on the guidelines and requirements needed to qualify for these grants, or if you just want to see what grants are available to you, go to Grants.gov.

Bank or SBA Loans

Another widely used source of funding for starting your own business, is to apply for a bank loan or an Small Business Administration (SBA) loan. Sometimes this can be a rather daunting process, because loans through a bank for purposes of starting a business will usually need to be secured through your personal credit history.

If you are new to starting a business then that means that you have absolutely no business credit history, so in order to qualify for a business loan, your personal credit history will be evaluated. Because of this, many people opt to go through the Small Business Administration (SBA) just to get start-up money for their companies.

The SBA offers an array of programs for those who are seeking to start their own business. You can even tap into their venture capital resources. Often it may be slightly easier to go through a credit union in order to get the business-based financial backing that you seek. Visit SBA.gov for more details.

Your 401K

Many people overlook this as a viable starting point. You can easily tap into your 401k by taking a loan out and borrowing against it. Using your 401k might be a safer option, because you can pay back the loan that you borrow, and your credit score is not reviewed just to qualify for the loan; but, if your business fails, you are out your retirement money and will have to pay it back anyway. Check with your payroll department to see how much you have saved in your 401k.

Credit Card or Trade Line

If you have any credit cards that are not maxed out, this may be a good avenue for starting your own business. Credit cards allow you to take out cash advances, which is a good thing if you are in need of quick start-up money, but which can be risky because they charge very high interest rates and fees to do so.

There is also the added flexibility that you may need regarding repayment terms. For example if you borrowed $10,000 against a credit card that had a maximum credit limit of $20,000, it would not be difficult to get your business up off of the ground while paying back the money that you borrowed off of your credit card.

Other Options

If you have tried all of the possibilities above, you might want to consider asking family and friends for a loan. Sometimes, your family and friends may have extra money stashed around, that they would not mind loaning out for a good cause. Additionally, if you approach them with a can-do, charismatic attitude they may be instantly inspired to help you out by loaning you money that you need to get your business started.

You also might consider writing up a business plan. Having a business plan handy will definitely show people that you are serious about your entrepreneurial endeavor. You can share your business plan with potential lenders including venture capitalists to see if they are interested in investing in your business.