The Truth About Small Business Funding

It requires effort to develop a business idea and business plan for a dynamic small business. But, even with the most thorough business plan, entrepreneurs can have trouble securing funding for their small business. Grant and interest-free loans are scarcely offered to for-profit businesses.

• The Small Business Association guarantees small business loans and sometimes offers direct loans. Typically, small businesses that have been turned down by a bank can have their loan guaranteed by the SBA for up to 90 percent. The SBA will provide a direct loan for disabled and Vietnam vets. SBA loans are guaranteed in amounts up to $750,000.


• Your own savings can be used to fund a small business. Many people turn to their savings account to help get their business off the ground. However, caution should be used because not all small businesses make it past the first year. Only invest as much as you can afford without compromising your quality of life.


• States have programs to help manufacturing businesses. Some states will provide loans or grants to help purchase land, equipment and buildings for businesses that plan to manufacture goods.


• Try to secure financing from vendors. If your business will rely heavily on one vendor, ask the vendor to finance part of your business. This not only guarantees advertising for the vendor but also funding for the business.


• Ask friends and family to invest in your business. A dynamic presentation can help friends and family make a decision to help fund your dream business. This approach should be used with caution because small business failure can lead to rifts between friends and families.