[Ctd] Five Point Capital - The Top 6 Ways to Get Home Business Financing

[paul.kholer paul.kholer]

http://www.fivepointcapital.com/


Once you have identified the 'big ticket' business idea that is going to
work for you, it starts raining fire to get appropriate financing for your
project. The keystone to building a successful business is your ability to
raise hard cold cash. You may be planning a shoestring budget for your start
up but even then every business needs some working capital for building
inventory, registration fees, insurance, for buying office equipment, maybe
even space. For a smart home business owner there are several ways to raise
capital for the start-up.

We have summed up some of the most obvious ideas for funding and some not
–so-obvious ones as well. If you have a robust business plan at hand and can
identify what is the best source of raising capital for you, it shouldn't be
all that difficult to get someone to show you the way to the vault.

1. *SBA Loans:* The Small Business Administration is a government
organization working towards promoting the small and home business segment
in the US. Though SBA doesn't issue grants or make loans directly, it is
still one of the best sources of funding for the home business owner. The
reason is that SBA guarantees loans made by private lenders to you as a home
business owner. One of the biggest problems you will face as a home based
entrepreneur looking for funding is trying to prove you are not a fraud and
have the capability to return the investors' money. So the SBA guarantee
reduces or eliminates the risk inherent in a new business venture, gives
credibility to your business and makes it easy for moneylenders to forward
money to you.

For more information visit the SBA site at:
http://www.sba.gov
http://www.sba.gov/financing/index.html

2. *Commercial banks:* Taking a loan from a bank is a good option because
banks don't require you to turn over equity or company control. However, you
must have the confidence and a strong plan to make your business start
making profits regularly or else it can get sticky paying the bank loan
back. To get access to bank loans you have to have collaterals and must be
able to prove your capability in your start up area.

3. *Personal Saving:* This is a favorite with a large percentage of first
time entrepreneurs because it is the easiest way to get money (if you have
it!), and you have no liability to any outside lenders. So if you've been
planning for your home business all along and have set some money aside, use
that to kick start your venture. An ex-colleague who turned a home business
owner recently decided to have a garage sale of all the stuff they didn't
need in the house anymore. I kid you not... they raised a sizeable sum in
just one weekend!

4. *Family and friends:* Borrowing from family or friends is a good idea
when the amount you need is relatively small. It can be clubbed with part of
your own savings and novel fund raising ideas like a garage sale to help
finance your business. This is an easy way to raise funds, as these are the
people who know you well and need fewer assurances. It is also unlikely that
they will drag you to a court if your business takes longer to get
profitable and repayment is delayed. But take care that money does not sour
your relationships; be professional in your dealings with them and get a
formal agreement drawn up in order to put the terms of the loan in writing.

5. *Venture Capitalists:* Venture capitalists are professional investors who
may be in charge of a large pool of capital gathered from a range of
sources. These firms invest in new, even high-risk or speculative businesses
without a proven track record, with the potential for rapid growth and high
returns in a short time. Take a look at www.vfinance.com to get you started
on this line of credit.

6. *Angel Investors:* Angels investors are relative to venture capitalists
and usually less demanding in the returns they expect. These are private
investors who expect their investments to make more money than through the
traditional markets. An angel investor could be your doctor, accountant or
attorney who seek out new businesses to invest in return for equity
ownership. Also see: www.angel-investor-news.com

Some other good sources of funding are Industrial banks, home equity loans
and loans on credit cards. Some other not so obvious ways of raising capital
can be equipment leasing and advertising. Another area, which you can
explore, is personal grants from corporates. For more information take a
look at http://www.fdncenter.org/funders/grantmaker/index.html

So arm yourself with a solid business plan, determination and the right kind
of information on what investors are looking for. You will hit the ground
running with some of these ideas above.
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