If you are trying to start a business and have realized you need additional funds, there are several places you can turn. Even in a down economy, there are resources available for people to start their business. Sometimes people are timid when things are tough, so those companies actually have more resources available because no one is trying new things when the economy is down. If you are looking for outside funding for your small business, there are some steps to go through.

Start with a Business Plan

If you don’t have a business plan, you need to write one before you approach a single person about funding for your business. IF you do have one, read it and make sure it is still adequate. If you went in for a personal loan, the bank will want to know how much money you make, and how much you can reasonably be assumed to continue making. Without that information, there is nothing to base your ability to repay the loan on, other than your word and how much they like your smile. 

In the same way, your bank wants to see pay stubs and employment letters when you are getting a loan for you, they want to see projections of how much the business could reasonably expect to make. Your business plan should start with market research. Have you identified a need that exists in your community? Is it a need that you are prepared to meet? Opening a dog cafe might be a good idea. Making it a dog cafe that caters specifically to Pitbulls, Mastiffs, and Staffordshire Terriers in a town with a ban on bulldogs and bully breeds is definitely doomed to fail.

Once you have completed your market research and thorough business plan, you should know exactly how much money you will need for startup expenses, including salaries, equipment, and any other needs you will have. Do not underestimate these numbers. 

If you go to a funding source and ask for $25,000, they might tell you no, or they might not. If you go telling them you need $15,000, and they agree, then next month you need $6,000 more, you have eroded trust. If they are an investor, they are watching much closer now. If they are a lender, they are now concerned that they won’t get the payment that is already due them.

Family And Friends First!

Once you know how much to ask for, start with your family and friends. Even if you don’t think they will have the money you need, they might surprise you and they are likely to give better terms than any bank. Even if they are not able to help, practicing that request speech before you present it to a random investor or a loan officer at a bank is bound to help later on. 

If the family and friends loan doesn’t pan out, there are many loans available. Depending on your credit (your business doesn’t have credit yet, so most loans will use your personal credit in combination with your business plan) you will have more or fewer options.

 Whether you need a full startup loan underwritten by the SBA, or a simple equipment loan that uses the equipment as collateral, you can often find information on multiple loan types from one lender or broker. If you are in the market for a business loan, consider these. There are loan options for every credit level and business size there. If you need funding for your business, know that it is out there, and don’t hesitate to look for it!