"Start-Up Funding
Every new business needs start-up capital. Loans, credit, and savings make up most of what we use, but there is a lot more to know about this topic!
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A Note from WomanOwned.com on Money For Your Business
I'm contacted almost daily from ladies like you who need money to keep their business running or want to find money to open a new business. I'm always glad to see that you are taking action, not just sitting there and hoping that things will happen for you. Obtaining funds to start or grow your business is a challenge that almost everyone faces at some point. I've owned a business for almost 15 years now and I've been through it also. Here's a sample of what has worked for me and my thoughts on these funding resources:
Personal Savings
Here is how I started my firm - $10,000 in personal savings. It took me a few years to set aside these funds, but I knew that I wanted to start a company and that I would need to buy a computer, software, business advertising, etc. to get it going. I also knew that revenue wouldn't come in as quickly as I needed to cover personal living expenses. Wow, how quickly these funds were spent! The interesting thing was the motivation that came from seeing the funds get smaller - I had to move faster / smarter - or I was going to fail! Luckily, it worked for me and I was able to make it through the first year of business.
Small Business Loan
About 3 years into my business, I had a few employees and I wanted to move into a larger office and fund the development of some software. These items were going to cost more than ongoing revenue from clients was going to fund, so I went to my business bank and asked for a small business loan. Because I could show steady revenue and I had a plan for the money beyond just "business expenses", the bank approved my loan. This was an installment loan with interest that would be paid back over 2 years. I made my payments and the bank was happy.
Business Line of Credit
Because the bank was happy about my loan transaction, they offered me a line of credit. This is basically a credit card that you write checks to use. This meant that I could tap the credit line when I wanted to buy things for the office or when I needed to make payroll and didn't have that "big check" from a client yet. A line of credit typically has a variable interest rate that is going to go up or down with the interest rate market. In 2011 (as I write this) the interest rate for me is 4.5%. This is cheap money for business funding and can be a great way to go. The downside is that you can depend on the money, use up the funds, and then not have the cushion that you need for emergencies.
After almost 15 years, I'm now looking into Angel Investment as an option to grow quickly, but I'm not sold on the idea yet. I have some contacts who can help me in those waters, and I'll continue to ask questions and then finally determine what is right for me. We have some great articles here on different ways for you to find funding for your business, so check out the links and I wish you much success!
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