If you don’t have sufficient capital to cover start-up costs and at least the first six months of operating costs, you may need to borrow money to get started. There are several options to consider.
You may start with your own personal credit. A home equity loan may be sufficient to get you started. Family or friends may be willing to loan you money. Or consider establishing a business line of credit with your bank. This can provide the money as you need it, without having to borrow a fixed lump sum.

If these sources aren’t enough, you can apply for a business loan through your bank or credit union. Keep in mind that before you can qualify for a business loan, you must be able to put up a percentage of your own capital against the loan. Your home and other assets may be needed as collateral. Before you approach a commercial lender make sure you:
  • Develop a solid, realistic business plan
  • Itemize specific expenses you anticipate
  • Apply only for the amount you can account for; a bank will not lend for unexplained purposes, without specific itemized needs shown
  • Outline your repayment abilities
TOPIC 7
Borrowing Money
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Guide | On Your Own
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