FUNDING A NEW BUSINESS - 1

A crafter wrote to ask how to borrow business money. He wants to start a full-time craft business, but needs funding to do so. His wife plans to continue working to help with daily living expenses. He asks how to go about obtaining needed money and asks what steps to take.

Where do you get the capital to be in business? First determine the amount of money needed for the next twelve months, analyze and prepare lists of start-up costs, operating and living expenses. Many entrepreneurs have some personal money set aside for start-up expenses. Perhaps you are frugal and have saved enough money to carry the business for a year or more. If not, you must get funding from outside sources. Go to The Money Game to read current, ever-changing news about money.

There are several sources available for financial backing. Home-based entrepreneurs find it difficult to borrow business-related money, so learn about the different options and don't concentrate on just one source.

Let's look briefly at several options:

CREDIT CARDS
Start-up costs can be put on a credit card when a loan from other sources is not available. There are people who have started business this way, but think hard before you do. Credit card money carries a very high rate of interest. If you need some quick cash for equipment or inventory, it is an option.

PERSONAL RESOURCES
Look at your personal assets. The amount in your checking account and savings account can be lent to the business. Notice the word lent. How serious are you about becoming an entrepreneur? The boat sitting in the backyard that is used two times every summer might look better as cash-in-hand for starting a business.

FAMILY FUNDING
Asking family to fund your business can cause problems. This is especially true if you are too optimistic in promising to repay money borrowed in a shorter period of time than is realistic. The best policy is to never borrow money from family members. SMALLBIZ Finance gives much information about banking functions.

A BANK LOAN
Your family banker is the best person to approach for a business loan. Research and prepare documentation before applying for a loan. First, go to talk with the banker. Ask what records and documentation will be required when applying for a loan. Share some of your business details. The officer should be able to tell approximately what can be done for you. All of

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