getting their ventures off the ground. Investors can supply needed capital and,
in some cases, advice to new business owners as they start their business.
However, to get investors involved, you have to get them interested.

According to the Entrepreneurship in the United States
Assessment, angel investors typically roll about $23 billion per year into
businesses, and about 50,000 to 57,000 businesses receive funds from angel
investors each year. If a bank loan or other financing isn’t the route you want
to take in building your business, turning to investors is probably your best
option for raising money to start your business.

Here’s a few tips for making your proposed venture more
attractive to investors:

Present a solid business plan. Your business plan is perhaps
your most effective pitch to investors. Be sure that it’s concise and complete,
and shows that you’ve made a serious study of your proposed new business, the
money it will need to get started and the potential risks involved for yourself
and your investors.

Do your homework. Investors will be impressed by
entrepreneurs who know their market, product, financials and can explain
specifically how their products or services can take advantage of opportunities
in the market and differ from their competitors. Be ready to answer questions
about projected earnings and growth and how investors’ money will help your
business grow.

Get some skin in the game. Investors are more likely to be
impressed by entrepreneurs willing to put some of their own personal assets
into their business. It shows dedication and confidence.

Be willing to listen. Most angel investors are more willing
to contribute money to business owners who are willing to listen to their
advice. As angel investors are typically experienced entrepreneurs, this advice
is very likely to be well-thought out and sound. While you may not ultimately
decide to follow an investor’s advice to the letter, at least be willing to
hear them out and consider what they have to say.

Get a partner. If you have a reliable friend or associate
who has started businesses before or is skilled at securing meetings and
commitments from investors, consider bringing him or her in as a consultant or
partner. You’ll get the benefit of both his or her experience and contacts.
Just be sure to clearly outline the relationship in writing, to avoid conflict
over leadership and finances.

Once your business gets started, you’ll hopefully make many
sales, but to get there you must make this first, most important sale to
investors. By following these tips, you’re more likely to get meetings with
investors and impress them with the potential of your business.

Small business loans are not as confusing as grants can be as these are simply loans from local financial institutions that can be used to start up a small business. They are not typically as difficult to get as grants can be and don’t have as many stipulations as grants do. The following information concerning grants should help get the potential business owner started on their way to having a new business up and running.

Grants

Grants differ from loans in many ways such as the factors that determine eligibility and approval. Grants are dependent on how much money is available to given out as well as the business or project that the money is going to be used for and how that business will help society as a whole.

The majority of government grants for small business are awarded to businesses that fall under artistic development, scientific type work, research, educational work and businesses that support or are owned by minorities.

Unlike loans, grants are totally free and do not have to be paid by back; on the other hand, grants are much harder to apply for and have a lot of stipulations that must be followed in order to get approval.

Steps to Applying for a Grant

The process for applying for a grant is one that must be adhered to explicitly. The entire process is much more elaborate than simply filling out some loan applications and presenting a business plan.

The first step is to find out which grants are available for the type of business that is being considered. The Internet is an excellent source of information on where to apply for grants. Once the right grant has been found, it is time to start applying for the grant.

Every grant will have a set of exact instructions that must be followed completely. All grants require that a complete proposal be submitted that includes what the goals are that the business will accomplish and explains what the money is going to be used for in detail. This part of the application process is very important as it can make or break the grant approval. Many prospective business owners hire someone to write their proposal to ensure that it is polished and complete in every aspect. Some of the most important parts of the proposal to include are:

• The main goal of the business, what it offers the community;
• How the business will compete with other like businesses;
• Advertising strategies;
• How many employees will be hired;
• How they business will keep the government of grantor updated on the progress;
• Any research or background information that the applicant has about the demography of the area where the business will be located;
• Current financial status of the applicant.

This may sound like a lot of information to include in a grant proposal; however, grants are free money and the government of grantor wants to ensure that they are putting their money into a business that will not only succeed but will also bring something to either the community where it is located or to society in general.

Time Frame

There is typically a time frame that must be adhered to when applying for grants. The importance of this should be noted during the research for available grants. Grants typically have a deadline for applying and once that deadline has passed, the grant is no longer open for proposals. The deadline and other important timeline information is included with all of the information that is released in the Federal Register. This is the place announcements are made about grants and is available every day except weekends. The time frame is one of the most important aspects to consider when looking for a grant, choosing one that has a very short time left in which to apply is a recipe for disaster. Rushing the proposal is not a good idea and can result in less than the ideal application.

Loans

Small business loans are not as complicated to apply for and typically can be done in the local branch of any financial institution. The typical small business loan requires a business plan to be submitted that will show the bank that the business has a solid plan that has excellent chances of success.

Loans and grants are both great ways to pursue starting a small business. Loans are usually easier to obtain than grants; however, grants do not have to be repaid and so are worth the extra effort required to obtain approval.

Finding financing to start up your small business is a key hurdle that many first time small business people find difficulty in negotiating. However, there are ample financing opportunities for would-be entrepreneurs out there, it’s just a matter of knowing where to look and how to ask.

The first step you need to take in acquiring capital for a small business is to write a business plan. A business plan is a document that outlines the basis and the mission of your business and how you expect to launch it and help it grow in the current economic environment. Business plans help lenders assess the viability of your business and the competence of its management, so having a solid business plan is important.  A good business plan should have an executive summary, market and industry analysis, operational overview and financial segment that gives estimates of how the business means to move forward to profitability.

Many small businesses are launched with investments from family, friends and partners. A key advantage of this arrangement is that the money can often be raised with a minimum of paperwork, but the amount of money available in these arrangements is often limited. Also, it can cause strains in friendships and family relationships, particularly if the business fails to prosper.

Banks and other lenders are an important source of capital for small businesses. When borrowing from a bank or financial institution, you typically must put up collateral and also convince loan officers that you and your business are good credit risks.

If you have difficulty in getting a loan from a bank, or if the interest rates the bank wants to charge you for a loan are exorbitant, consider doing business with a credit union. Credit unions are designed to provide members with low-interest loans, particularly for personal needs like mortgages, car loans and small business startup capital.

The Small Business Administration makes a variety of loans available to people who want to start a business. The SBA typically makes these types of loans available:

7a loans are typically loans made through banks and other lending institutions to small businesses with special needs, such as export businesses or businesses that work in rural areas or other highly specialized purposes.  For example, some 7a loans are available to entrepreneurs who want to start businesses in underserved or undeveloped areas.

The SBA’s microloan program makes small loans (less than $50,000) to businesses to buy equipment, material or machinery. The loans may also be made to daycare centers. The average microloan is for $13,500.

The SBA’s CDC/504 loan program typically awards loans to businesses to buy equipment or facilities. The loans are intended to develop communities and larger amounts can be borrowed by businesses meeting certain policy goals such as hiring minorities and women or business district revitalization.

Perhaps the best way of finding out about the small business loans available to you is to contact the Small Business Administration. This government agency can help you determine if you’re eligible for any government-sponsored small business loans or other programs to help you acquire capital.

According to the Wells Fargo/Gallup Small Business study, the majority of small business owners fund their start-up costs from personal savings, while more than a third obtained loans or lines of credit to launch their businesses.

If you’re looking for start-up funding for your small business, consider the following options:

- Government grants and loans. The Small Business Administration makes a variety of loans available to small business entrepreneurs. The SBA Express program can help business owners get quick access to funding for their business with expedited bank loans. SBA Express loans can be made for up to $150,000 and loan decisions are made within 36 hours. The SBA can also help guide you to government grants and other programs that you may be able to use to get started.

- Community banks. Community banks specialize in making the type of small loans necessary to start a small business. They’re also less constrained by corporate rules about who they can lend to than the big banks, making it more likely that they can lend money to you. Credit unions typically can offer loans at lower rates because they are non-profit, and the money they make is directed toward keeping borrowing costs low.

- Credit cards. Credit cards can be a source of funding for small business and other ventures. (Director Kevin Smith funded his breakout movie Clerks almost entirely with credit cards.) As credit cards have high interest rates, this can be a risky move and should be considered only if funds can’t be found elsewhere.

- Investors. Angel investors are essentially wealthy individuals who invest in high risk new ventures for convertible debt or ownership equity. Angel investors typically invest in tech start-ups. Angel investors can be a great help for starting businesses, but typically expect a high rate of return on their investments.

- Partners. Bringing partners into your business can help you secure funding for your business, particularly if your partners are more well-heeled than yourself, or if they have better connections to lenders. The downside is that by bringing partners into the business, you’ll have to share decision-making and profits.

- A home equity loan. By tapping the equity in your home, you can secure a loan to help fund your business as it gets off the ground. The downside of this is that it will extend the life of your mortgage, and if your business fails and you are unable to meet payments, you could lose your home.

- Personal loans. By soliciting funds from friends and family, you can avoid the hassle of dealing with banks and financial institutions and likely enjoy zero or little interest. However, borrowing money from family or friends can put great strains on relationships, particularly if you become unable to repay the debt.

These are just some of the methods of funding a start up. Before beginning your search for start-up funding, experts suggest that you spend extensive time on your business plan to ensure that you have a clear mission for your business and a solid estimate of your expected profits to present to lenders.