Tuesday, January 15, 2008

How to Find Someone to Loan You Money for Your Business


Finding the right person to loan you money to start a business can be more difficult than actually starting the business.


Difficulty: Challenging

Things You'll Need



Step One

Create a business plan so that you and potential funders will have an idea of exactly how much money you need.

Step Two

Tap all of your financial resources first. People will be more willing to loan you money if they know you are willing to invest your own money in your venture.

Step Three

Ask business associates for advice and a loan, if possible. These people are more likely to understand the need for capital and the risks associated with it.

Step Four

Call on the Small Business Administration. They often have classes or mentor programs that will help you locate investors, grants and loans.

Step Five

Consider friends and family for a loan. They are often willing to help you out financially, but understand that the costs may be too high. They may feel they have a right to your personal business and criticize you on how you are running the business (i.e., spending their money).

Step Six

Look in business sections of financial newspapers and magazines for investors.

Step Seven

Investigate venture capital Web sites and books. These directories are full of possible funding sources.

Tips & Warnings

  • The more comprehensive and professional your business plan is, the better your chances of getting money from investors.
  • Even though it seems like everyone is getting venture capital funding these days, they're not. Be prepared for a few rejections before someone comes through. And be prepared to alter your business plan, if necessary.
  • Get everything in writing, even with family and friends. Have the document reviewed by an attorney, if possible.

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