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Where To Find Money To Start Your Own Business.

When looking for money to start a business, you have plenty of options to check out. Of course, not all of them will pan out, but if you open up your search to as many places as possible, chances are that you will be able to get some funding from somewhere. In this economic climate it can be difficult to secure the money you need, but there is definitely money out there to be had. The key is to having a solid plan that you can present to possible lenders; making them feel as though your idea will succeed goes a long way towards getting them to release the purse strings. I am writing this post from some personal experience of late, as my wife is finishing up her business plan for a small private Montessori School she wants to open here and will soon be presenting it in order to get some funding. Over the course of our discussion about this and in putting together her plan of action, here are the places she is going to look for money, in the order she is going to look.

  • Family – Her mother has already said she would loan her some start-up money, interest free, which is a great start. This amount of money will help to buy supplies and furniture for the school.
  • Friends – Her old boss from the private school in Los Angeles wants to help out as well, because she remembers when she was starting her own school. I guess she wants to return the karma! This is another great source of funds that comes with no strings attached and no interest.
  • Soliciting Donations – Because where we live is such a tight-knit community where everyone hears about everything you do, a new school might be seen as a good thing for wealthy donors to give money to and help create.
  • Bank Loans or SBA Loans – This is the next plan of attack, to look for low interest loans from either our local banks here in town or the Small Business Administration. Because we live in such a small town, our banks are solvent and willing to lend money, especially for education programs for our town. So this could be really great for her, to be able to borrow locally.
  • Peer to Peer Lending or Credit Cards – This is the last resort for finding money, and one that I don’t think she will have to resort to. There is nothing wrong with peer to peer lending (check out my review of Lending Club there) or using credit cards to start a business, as many people have done it successfully, but we both would like to avoid it. If we have to, we will definitely use 0% interest balance transfer cards though so we don’t have to pay interest right away.

So those are our (her) ideas at this point to get funding for her new small school. After doing all the research, she knows the market is here for a new Montessori school for little ones, so she just has to finish her business plan and then start presenting it. Exciting times may lay ahead, but I am sure it will all work out for the best – and then both of us will own our own businesses which will certainly change our lives for the better.

What about you? Have you ever looked for/received start-up funds from one of these sources or another I didn’t mention? What was your experience with them? Would appreciate hearing from you in the comments!


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Comments (9)

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  1. Personally, David, before I started my business I started to cut back on some personal expenditures and funded an account that I was going to use to loan to the business. I’ve never been big on asking others for help financially (even when it comes to holidays and birthdays, I give but tell people that I don’t want to be given anything). After I incorporated, I opened a business checking account as well as a business credit card which I used to fund the purchase of my domain names, logo design, websites, marketing materials, etc. By loaning the business the money out of my own pocket, I cut out any pressure to move to fast or recklessly in order to pay back others. Also, by doing so I started to establish the company as its own entity as far as credit is concerned so that in the future it will be able to operate independent of the person behind it.

  2. Frugal Dad says:

    I like the idea of using some combination of personal savings and interest-free private loans. While I agree with Eric that it would be ideal not to be indebted to anyone, sometimes that is not feasible based on the size of your project. There are also concerns with depleting too much of their personal funds trying to get a biz off the ground. David, good luck to you and your wife on this project–exciting times, indeed!

  3. david says:

    Yea, for a smaller online business, paying for it yourself is certainly the best option. But for something like this, when you need commercial property, equipment, school supplies, insurance and employee costs, etc, you kind of have to borrow money. Hopefully however we work out the numbers things will go smoothly.

  4. My husband just called saying that his brothers approached him this morning about starting a business with them. I got off the phone and went back to my reader. This was the very next post in line to read. How bizarre. It’s got to be a sign.

  5. david says:

    Wow, how bizarre Ashley!

  6. Craig says:

    Borrowing money from family and friends would be the best way because you wouldn’t have to pay high interest rates back, if any at all.

  7. I would say one thing about SBA loans….they are very difficult to obtain for a start-up business. Unless you are buying equipment or an existing business you will have a difficult time getting an SBA loan for a new business.

    Lending Club of course, is a great spot for up to $25,000 to start a business. Thanks for the mention.

    dk
    Product Ambassador
    lendingclub.com

  8. TruceSeeker says:

    I would recommend NOT using credit cards at all. Even if you think that 0% transfer period interest rate is tempting, the reality is it may bite you in the end when you try to refinance it. I think p2p lending sites offer a fantastic opportunity to appeal to strangers with your idea. If it gets funded: awesome!, if not… you may need to consider the pitch and/or the idea itself

  9. Bernz says:

    In my case, I have save up some money over a few years then I opened up a Home Equity Line of Credit for additional funding and it was such a great decision on my part.

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