Even with a great business idea and plan, financing can be a huge challenge. With the developments in the financial markets over the past several years, banks have become more conservative but there are other options available. Don’t underestimate the time it may take to get your loan approved and get started on the process earlier, rather than later.
Before going to the bank, your credit score should be checked to ensure your information is correct. Visit www.annualcreditreport.com to get your report for free. Make sure you get a complete report (which explains where any deficiencies may be) as well as your credit score, which is a number up to 850. Banks
Here is a brief summary of the major options for funding a business.
1. Personal funds
The first place you should look is your personal savings to start your business. The less you borrow is the less you need to come up with every month to make the monthly payment. In addition, expect the bank will require you to put in cash or personal assets to secure the loan. There are no 100% financed business loans. The amount you will be required to provide will vary depending on the type of collateral, your credit score,
2. Friends & Family
Many businesses are started with funding from friends and family and many relationships have been lost too. Be sure to discuss the expectations
3. Business loans
Banks are another source of funding for businesses. Before going to the bank be sure to have your business plan and credit in order. Banks
If you don’t have enough collateral or the bank sees your project as being too risky to fund themselves, there is an option of using an SBA or USDA guarantee. Contrary to popular belief, the SBA does not make business loans.
Another source of loan funds are revolving loan funds which are offered through local economic development agencies, which are offered to businesses to create jobs. Click for a list of agencies. These funds come from a variety of agencies such as SBA, USDA, EDA, HUD and more. While
Investors are looking for opportunities to take on more risk with a small business but have the possibility for more financial reward should the business grow quickly. Investors typically look for high-growth, technology-based and exciting businesses that have the potential for a high payout (though many
5. Customer Financing
If you have customers who are ready to buy from you, consider having them give you a deposit which will help you raise the initial cash to get started. Be sure to let them know when their order will be fulfilled so no long-term damage is done should they expect you to deliver sooner.
Despite what all of the infomercials tell you, there are really not many grants to start or even grow a business. You will find a few in areas such as science, technology, agriculture, tourism
Illinois Tourism Grant
Illinois Department of Agriculture
Illinois Recycling Grant
Have additional questions about starting your business? Contact the Illinois Small Business Development Center (SBDC) at Southern Illinois University for a confidential business consultation at no charge to you. Call (618) 536-2424 to set up an appointment.