1. Small Business Start Up Financing
Succeed in your
business endeavors.
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SMALL BUSINESS START
UP FINANCING

2. Small Business Start Up Financing
Succeed in your business endeavors. Find out more
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The number one question I get asked as a
small business start-up coach is: Where do I
get start-up cash?
I'm always glad when my clients ask me this
question. If they are asking this question, it is a
sure sign that they are serious about taking
financial responsibility for start it.
Not All Money Is the Same
There are two types of start-up financing: debt
and equity. Consider what type is right for you.

3. Small Business Start Up Financing
Debt Financing is the use of borrowed money
to finance a business. Any money you borrow
is considered debt financing.
Sources of debt financing loans are many and
varied: banks, savings and loans, credit unions,
commercial finance companies, and the U.S.
Small Business Administration (SBA) are the
most common. Loans from family and friends
are also considered debt financing, even when
there is no interest attached.
Debt financing loans are relatively small and
short in term and are awarded based on your

4. Small Business Start Up Financing
guarantee of repayment from your personal
assets and equity. Debt financing is often the
financial strategy of choice for the start-up
stage of businesses.
Equity financing is any form of financing that is
based on the equity of your business. In this
type of financing, the financial institution
provides money in return for a share of your
business's profits. This essentially means that
you will be selling a portion of your company in
order to receive funds.
Venture capitalist firms, business angels, and
other professional equity funding firms are the

5. Small Business Start Up Financing
standard sources for equity financing. Handled
correctly, loans from friends and family could
be considered a source of non-professional
equity funding.
Equity financing involves stock options, and is
usually a larger, longer-term investment than
debt financing. Because of this, equity
financing is more often considered in the
growth stage of businesses.

6. Small Business Start Up Financing
7 Main Sources of Funding for Small Business
Start-ups
1. You
Investors are more willing to invest in your
start-up when they see that you have put your
own money on the line. So the first place to
look for money when starting up a business is
your own pocket.

7. Small Business Start Up Financing
Personal Assets
According to the SBA, 57% of entrepreneurs
dip into personal or family savings to pay or
their company's launch. If you decide to use
your own money, don't use it all. This will
protect you from eating Ramen noodles for the
rest of your life, give you great experience in
borrowing money, and build your business
credit.
A Job
There's no reason why you can't get an outside
job to fund your start-up. In fact, most people
do. This will ensure that there will never be a
time when you are without money coming in

8. Small Business Start Up Financing
and will help take most of the stress and risk
out of starting up.
Credit Cards
If you are going to use plastic, shop around for
the lowest interest rate available.
2. Friends and Family
Money from friends and family is the most
common source of non-professional funding for
small business start-ups. Here, the biggest
advantage is the same as the biggest
disadvantage: You know these people.
Unspoken needs and attachments to outcome

9. Small Business Start Up Financing
may cause stress that would warrant steering
away from this type of funding.
3. Angel Investors
An angel investor is someone who invests in a
business venture, providing capital for start-up
or expansion. Angels are affluent individuals,
often entrepreneurs themselves, who make
high-risk investments with new companies for
the hope of high rates of return on their
money. They are often the first investors in a
company, adding value through their contacts
and expertise. Unlike venture capitalists,
angels typically do not pool money in a
professionally-managed fund. Rather, angel

10. Small Business Start Up Financing
investors often organize themselves in angel
networks or angel groups to share research and
pool investment capital.
4. Business Partners
There are two kinds of partners to consider for
your business: silent and working. A silent
partner is someone who contributes capital for
a portion of the business, yet is generally not
involved in the operation of the business. A
working partner is someone who contributes
not only capital for a portion of the business
but also skills and labor in day-to-day
operations.

11. Small Business Start Up Financing
5. Commercial Loans
If you are launching a new business, chances
are good that there will be a commercial bank
loan somewhere in your future. However, most
commercial loans go to small businesses that
are already showing a profitable track record.
Banks finance 12% of all small business start-
ups, according to a recent SBA study. Banks
consider financing individuals with a solid credit
history, related entrepreneurial experience, and
collateral (real estate and equipment). Banks
require a formal business plan. They also take
into consideration whether you are investing
your own money in your start-up before giving
you a loan.

12. Small Business Start Up Financing
6. Seed Funding Firms
Seed funding firms, also called incubators, are
designed to encourage entrepreneurship and
nurture business ideas or new technologies to
help them become attractive to venture
capitalists. An incubator typically provides
physical space and some or all of these
services: meeting areas, office space,
equipment, secretarial services, accounting
services, research libraries, legal services, and
technical services. Incubators involve a mix of
advice, service and support to help new
businesses develop and grow.

13. Small Business Start Up Financing
7. Venture Capital Funds
Venture capital is a type of private equity
funding typically provided to new growth
businesses by professional, institutionally
backed outside investors. Venture capitalist
firms are actual companies. However, they
invest other people's money and much larger
amounts of it (several million dollars) than seed
funding firms. This type of equity investment
usually is best suited for rapidly growing
companies that require a lot of capital or start-
up companies with a strong business plan.

14. Small Business Start Up Financing
Small Business Start Up Coach provides value, inspiration and direction to entrepreneurial
women starting up and launching small businesses. Accidental Pren-her™ providing a place
for pren-hers to share stories, build community, and embrace their inner Samurai. Welcome!
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