Top Sources of Business Startup Financing

Are you looking for capital to start a new business? Then you are best prepared to reach out to your own pocket. The Small Business Administration (SBA) reports that 60 percent of entrepreneurs seeking business startup financing are using personal savings to get off the ground. Here’s a closer look at how startups get their meaning.

Personal Equity and Traditional Loan Business Startups are the primary sources of financing: Six (57 percent) of startup business owners use their personal savings as start-up capital. In addition, one-quarter of all quarters start their business without startup capital. This approach is very common for beginners without staff.

Here’s how the remaining business start-up financing resources break down:

· Personal credit card: 8 percent

· Bank Loan: 8 percent

· Other personal assets: 6 percent

· Home equity: 3 percent

· Business credit card: 2 percent

If you consider personal credit cards, “other personal assets” and home equity, the percentage of startup owners using their own money to start a business is reached.

It’s a bit easier to start with your own money, but if you’re just starting out as a startup with a noise string. According to the SBA, almost 2 percent of entrepreneurs who use no startup capital at all, startup capital launches at less than $ 5,000. About 21 percent of startups are between $ 10,000 to $ 24,999. More than 14 percent have $ 50,000 to $ 99,999 to start their business. Less than 10 percent of startup capital is $ 250,000 or more; they are more likely to be employer companies.

While most businesses of all types start without external financing, women-owned businesses are more likely to do so than men-owned startups. More than twice as many men (0.6 percent vs. 6.6 percent) than women use bank loans to spend money for their startups.

African American and Hispanic-owned businesses are much less likely to use bank loans than Asian or Caucasian-owned businesses. Instead, these entrepreneurs tend to turn to personal credit cards for start-up capital.

The planning of ​​starting a business without taking out bankruptcy may seem like a smart move, especially if you are raised in fear of getting debt, but the SBA has noted that it can be a disadvantage for women and minority entrepreneurs. By not going to the banks for loans, these entrepreneurs are failing to establish a strong banking relationship in the critical early years of their business. If you need money for working capital or expansion, then it is worth having a relationship with a banker.

About two-thirds of small business owners have some debt, the SBA says. Using debt to start or expand your business is not a bad move unless you do so wisely. Things to do and things to keep in mind:

· Write a business plan. For a startup, a business plan will help you think through your strategy and determine how much money you need to borrow, as well as help prospective lenders be successful enough to repay.

· Do not bite as much as you can chew. Startup business owners are extra optimistic about their chances of success. A more conservative view of your financial forecasts will not only affect the lender but also ensure that you do not go over your head with more or less debt than you actually have.

· Keep some of your own money. End lenders want to see that you have enough confidence in your startup to invest your own money. You really can’t expect to get a loan unless you are willing to take some risk yourself.

· Don’t rely solely on personal debt. When you use personal credit card or home equity for your start-up money, you are putting your credit rating (and possibly your home) at risk. Even if you successfully pay off personal debt, you’re not creating a good credit rating for your business by doing so. Instead, try to get a business credit card and business financing — it will get your com