In the current economy, money is hard to get. I don’t want to be negative but realistic. The small business owner needs to know what options there are. For an infusion of cash into an existing business or cash for a startup, the road is not as open as it used to be. The 10 steps below are a start to the process of finding money.

1. Friends, family and fools

The most common place to get money, the loan is usually at the lowest interest rate if any. You’ll need a business plan to show but this is a great place to start. Be warned, if your business fails it is your family and friends that you owe, and could damage your relationship with them. Work hard to make your small business a success.

2. Owner’s investment

Savings, insurance cash and potentially 401(k)/IRA’s are all options. If you are starting a business, it’s expected that the owner put in some of the startup cash so the risk is shared.

3. Home equity loan

In today’s market, money from your home is a risky proposition. Although it is available, if your business turns sour you are risking a lot, your home. But if no other option, home equity loans are made all the time.

4. Credit cards

Not a good way to get money. The trap, buy on credit or through cash advances, pay the minimum and watch the interest grow. This alone can pull a business into failure. A solution is to use the credit card with the intention of paying it off monthly to avoid accruing interest.

5. Bank or credit unions

For a startup business, collateral is needed to secure the loan with a low probability of success. For an existing small business with a history of success, this avenue could be lucrative. Go to your local credit union and sit down with the loan officer and ask questions. It depends on the type of business, your collateral, and your credit rating as well as other factors. It helps if you are also a client of the bank or credit union, to start.

6. Small Business Administration ( www.sba.gov)

The SBA guarantee’s loans through banks. By doing this, the guarantor, the SBA, reduces the risk to the bank making it easier to loan money. There are many loan packages such as:

• 7(a) loan program– One of the primary loan programs in the SBA. Go to the site referenced above for more information.
• Microloan program– Up to $50K can be loaned through an intermediary lender for short term loans. Ask your local SBA office for a list of the lenders in your area.
• CDC/504 loan program– Long-term loan for fixed assets such as land or buildings. CDC lenders work with the SBA so visit your local SA office to get a listing.
• Disaster Loans– SBA can provide long-term low-interest loans.

There are other loan types, so visit the website and read about ones that may be applicable to you.

7. Department of Community and Economic Development

Look for this department on the internet, in your city and state. The department was created to promote a healthy business community so this may be a capital resource.

8. Department of Agriculture & Rural Development

Visit the site for references and other non-traditional sources of capital.

9. Angel and venture capitalists

These are people and groups that invest money to help business startup. They are usually more willing to invest in a large undertaking of something that is unique with a large growth potential and strong management. Be ready with your business plan to approach them. To find them may be difficult but search Google.

10. Additional avenues

Listed below are some non-traditional areas where money may be available.

• Sale of capital stock
• Partners
• Federal grants

Conclusion

It’s not easy out there so be inventive and ask questions in your area. There may be more options for minorities.