3. Finance Your Startup
Once you have developed a business plan, that are several resources for small business financing.
Here are a few considerations for entrepreneurs seeking financing:
- Project Costs
Your “project” includes everything needed to open for business. Building, leasing costs, inventory, equipment, vehicles, marketing, etc. These details should be outlined in the business plan.
Do you have cash or other assets that you will be investing in your business? Generally speaking, lenders like to see some “owner-participation” with regards to financing. This demonstrates a commitment to the business and its success.
Simply put, equity in the neighborhood of 20 – 30% is generally requested by lenders. If total project costs are equal to $150,000, then an owner should expect to contribute around $30,000-$45,000 in cash and/or assets.
Lenders often cite that applications are denied simply because they are not complete, or the prospective borrower did not fully understand application requirements. Check with your local lender about setting up an appointment in advance of submitting your application to understand all application requirements.
Obtaining Financing for your Business
When you are ready to pursue financing, you will want to visit our Finance Your Business page for a complete list of banks, credit union, alternative loan financing available through EDB's partner organizations, and angel investors/venture capital.