Where to Find the Money to Make Your Dreams Take Flight
“Every great dream begins with a dreamer. Always remember, you have within you the strength, the patience, and the passion to reach for the stars to change the world.” – Harriet Tubman
Have you been dreaming of opening a coffee shop since the first time you sipped a caramel machiato, but instead, you spend your days, using your college degree, in an office, not talking to customers about their favorite lattes? Do you feel like it’s time for a change? If so, you might be wondering how you’re going to finance your move from employee to employer.
Unless you were born independently wealthy, finding the money to start your business will probably be one of your greatest challenges. How will you ever amass enough money to finance your calculated start-up cost and still have enough to cover your personal budget?
Whether you have been dreaming about starting your business since you were a child, or you just got the idea in the shower yesterday, to make that dream a reality, you will have to find some seed money to start. If you don’t have the start-up money you need to fund your business already sitting in the bank, all is not lost! Here are ten ways to find the seed money you need to finance your dream.
Apply for a Business Loan
A business loan might seem like the place to begin; however, most banks are hesitant to loan money to a start-up business with no proven trackrecord. If you do apply for a business loan, the lender likely will need a formal business plan and information such as how much money each owner is contributing to the initial expenses and what your projected income will be. They will also require signed personal financial statements for all owners. Consider alternatives to your local bank for business a loan, as more and more options become available (See PayPal’s Small Business Loan Program).
Consider a Microloan
The U.S. Small Business Administration established the microloan program to assist small businesses with loans of up to $50,000, although the average loan is $13,000. Intermediary lenders the SBA calls, “nonprofit, community-based organizations with experience in lending as well as management and technical assistance,” provide loans for working capital, supplies or inventory, machinery or equipment, and furniture or fixture. Find an intermediary near you via SBA.gov.
Apply for a Business Grant
Federal (grants.gov), state, and local government agencies (SBDC) offer a number of grants to small businesses, in addition, several private companies offer grants through yearly contests. Finding the right grant that fits your business profile and then applying can sometimes seem tedious, but the reward is definitely worth it for an incremental $10-$25K in funding to help boost your business.
Apply for a Contest
Contests are slightly different from a grant, from where the funds are coming from to what you’re required to do in order to qualify, but they’re just as beneficial for an infusion of cash (and many times offer additional help to accelerate your growth). Pitch contests for funding and start-up support programs (accelerators, incubators, etc.) are becoming extremely popular and more and more organizations are getting involved in helping new ventures get off the ground. Reach out to local start-up groups in your area and be on the look-out for any “pitch” or “Makeover” contests that you might qualify for.
Work a Second Job
One of the easiest ways to finance your business is to invest your own money to start. Don’t have the money? You can work a second job, part-time will do, and save the income from that job to start your business. It’s normal, especially in the beginning, for a small business owner to work an additional job to help make ends meet while they build their business.
Reduce Your Expenses
You might be able to find several hundred dollars of fluff in your budget that could be used to establish your business. Save money each month by eliminating your premium cable channels or by adjusting your thermostat up a notch or two when you aren’t home. Calculate how much you spend eating lunch or dinner out and reduce that expense by bringing your lunch to work or eating dinner at home more frequently. Add up this $10 lunches and $20 dinners to estimate how much you could save if you ate in even half the time.
If you cannot afford to give up your current job to start a new venture, consider working your new business part-time. Perhaps you can take on one or two clients to start, and build your savings until you can work your business full time.
Work From Home
If you can tolerate living and working in the same space—maybe your office already makes you feel like you live there—then perhaps a home-based business is right for you. The SBA reports that 52% of small businesses are home-based. Basing your business in your home eliminates expenses like rent, utilities and office equipment.
Take a Home Equity Line
Your home may be worth more to you than just office space. If you have sufficient equity in your home, and good credit, you might qualify for a home equity line of credit with your lender. Bear in mind that if your business goes belly-up, you will still owe payments, or worse, you could even lose your home. Ask your lender for the guidelines or find them online, and make an informed decision.
Ask Friend & Family
If your friends and family are willing to invest in your business, you can borrow money from them. Keep these transactions professional. Present your business plan and negotiate terms with them. Making your dream come true should never come at the cost of your friends and family.
Use Your Credit Cards
If you already have great credit and an available balance on your credit card(s), you could be in business in no time at all. You can use your card for purchases or as a line of credit to finance some of your initial business expenses. There is obvious risk in using your personal credit cards—with potential high interest rates—to finance your business. Keep meticulous records and spend wisely.
Try Peer Lending
If the bank and your family have turned you down, don’t let that dream die without investigating peer lending. Peer lending brings together borrows that need capital and investors with money to lend. You can apply online at Prosper.com or LendingClub.com.
It is time to make your dream of owning your own business a reality. Finding the funding to start your dream business isn’t selling your soul; it’s freeing your soul by investing in your future.24