Finding startup money for a new small business: Part 3

Many people dream of starting a small business. Few people actually do it. The largest obstacle for many is raising enough money to get off the ground. But somebody out there is making it happen; new businesses are popping up every day.

In the last section we looked at how home equity lines of credit, retirement savings and buying on credit can help finance a small business. Here is a look at a few more common sources of start-up money. Hopefully these ideas can help you get the ball rolling in starting your own small business:

Family, friends and associates

Those closest to you are often the ones most willing and able to help. Borrowing from friends and family can help you avoid the time and costs of countless piles of paperwork and filing. They can charge you lower interest rates than commercial lenders or perhaps no interest at all. Just remember, this type of borrowing is still legally enforceable if things go wrong. Additionally, you may want to be cautious about borrowing because if you cannot pay them back you may be damaging a good personal relationship. Lastly, borrow from friends and family that can afford it, not the ones who live on fixed incomes and only have a set amount of money in the bank.


In the past banks were often hesitant to lend to small businesses. Banks wanted to see records of solid business performance before lending substantial amounts of money, even if the borrower provided collateral. However, in recent years banks have begun to lend to small business ventures at a greater rate. Many banks have small business departments and if the entrepreneur has a solid business plan he may get a loan. Banks will also be far more willing if the entrepreneur has a business plan approved by the Small Business Administration (SBA). The SBA will approve the plan, guarantee the loan and the bank then lends the money. Using banks and the SBA can help you get good interest rates and substantial sums of money.

Other commercial lenders

A large quantity of small business loans come from lenders other than banks such as GE Capital or the Money Store. These lenders often have more flexibility than banks and if you have an SBA approved plan your chances of getting approved are high.


The most difficult part of starting a small business can be finding the money to get off the ground. There are countless sources of money, but three of the most common sources are family and friends, banks and other commercial lenders. Thousands of entrepreneurs have started with a nice mix of the above three sources of income. For more advice on how to raise income for small businesses stay in tune to the website and check out part 2 of this series.[1]

Want To Read More?

Finding start-up money for a new small business: Part 1

Finding start-up money for a new small business: Part 2

Finding start-up money for a new small business: Part 4

[1] Fred S. Steingold, Legal Guide for Starting and Running a Small Business 153-159 (Betsy Simmons ed., Nolo 10th ed. 2008).