Securing Business Start-up Capital

So you have a great idea for a new business.  You thought it through and are sure it will be a success!  All you can think of is the incredible success and rewards that this new business venture will bring you.  Great!  So what now?

One of the most important and yet challenging aspects of starting any business is securing a line of funding.  Unless you are lucky enough to have enough cash on hand to fund your business venture you are probably already thinking about how you are going to pay for all of this?

Essentially there are two major options.  If your business proposition can muster up enough excitement and promise you might want to get some venture capital investors to partner with you.  This is especially popular with larger projects.  The large down-side to this option is the fact that you are forced to share potential profits with your partners.  In most cases, this can suck up a good portion of you future profits.  While not the most popular option, this certainly has it place especially in larger projects that require large amounts of upfront cash.

The second is the more popular option because it puts you in direct control and sole ownership of your new business.  This is securing a business loan or line of credit.  Even if you are the select few who have disposable income available to invest in a new business, you should think long and hard before sinking your own hard earned cash into an even marginally risky business venture.  Many investors who have learned the hard way will offer similar advice in “don’t invest cash that you are not ready to lose”.

Start an LLC or a legal corporation first by filing the appropriate paper work with a local attorney.  Once you have a legal entity setup, you can approach bank to secure start up capital for your new business.  By following this tried a proven method, you protect your loses in the case your business does not succeed.  You can forfeit the business and separate your personal assets from losses.

Choosing the best bank to develop a business partnership can be difficult and extremely time consuming.  Anyone who has been through this process will tell you that the more financial institutions you can talk to and research, the better terms and rates you will end up with.  Sometimes local banks are best. Sometimes larger national and international chains offer better terms.  Ultimately, you need to weigh out all the offerings and compare what is best for your case.

Innovative services like LendingTree.com offer a single source where you can fill out one single application and allow LendingTree solicit their large network of banks to bid on your business for you.  They then allow you to compare terms and rates side by side in one place to allow you to make a more informed decision.

In the end, your cash flow will dictate to you how far and how fast you can grow and launch your business.  Without good finacing options, even a great business idea can fall by the way side of missed opportunities.  Take time to get as much information as possible and make your decisions the right one!