Funding Options for Starting Your Business

Starting a Business: Lesson 6

Josh Brown, a Senior Small Business Specialist with the TSBDC, will be discussing funding options for starting your business.

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Video Lesson Topics

- What Do I Need to Do?

Consider the following: How much money will I need to start my business and keep it running for 60-90
days? There are no government grants to start your business. How do I prepare to approach potential investors? Establish a relationship with your financial institutions. you also need to take time
to talk to one of the TSBDC consultants or your financial institution about what your needs are

- Types of Funding

Personal Savings: Have at least 10-15% of your own money to get your business started. If you don’t have your skin in the game, why would you expect anyone else to invest money in your business that you want to get off the ground?
Friends and Relatives: This can be a good source, however, there needs to be upfront and clear communication on expectations. In addition, it is also wise to have a written contract of exchange.
Banks and credit unions: Banks are the primary lending vehicles in the country. They are often a great source and many of them understand small businesses. Credit unions, like banks are in the business of lending money. They fly under different rules on how funding should be done. But at the end of the day, they’re much like banks.
Local and regional economic agencies: Depending on geographic locations, there can’t be monies investing in small businesses.
Crowdfunding: This type of funding is best for new inventions and if business owners are willing to heavily promote the product on social media.
Microlenders such as Kiva: Kiva is a loan option similar to crowdfunding, where you convince the community to invest in your business.
Alternate lenders (third party lenders): They charge higher interest rates and are creative about collateral.
SBA lending programs: The Small Business Association does not directly lend money to you, it works with banks and approved lenders. The lenders take your application and then reach out to SBA on your behalf.

- How to Prepare and Approach a Lender/Investor

Have a Business and financial plan for at least the first 6 months ready to share with your potential investor. Make sure to plan for your marketing expenses as well.
Have someone else review your financial plan first. Work with your TSBDC counselor to help you get ready.
Make sure you read and understand all terms and conditions of your loan once you get approved and before signing.

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