The Money Hunt: Where to Find Business Start Up Money!

These days when it comes to financing it is more difficult than ever to find a bank that has the resources and willingness to lend to a small business. In today’s economy achieving the American Dream; of one day owning your own salon is extremely difficult. You may have all the skills, education, drive and personality but lack one very important aspect, money!

The money factor puts limitations on any new business venture and destroys dreams. If you are lucky enough to either borrow from family members or decide to deplete your personal savings that's great but these options can put you in a compromising position.

If opening your own salon is your dream don’t be discouraged there are financial alternatives that will assist you in not only making this a reality but a success.

1. How deep are your pockets?

This may be daunting at first glance, but it’s the most popular source of business startup money. Start with the cash you have in your bank accounts. Look at all of your assets that you may be able to sell such as; cars, jewelry (gold is at all-time highs), and antiques. You may have a stock portfolio you can leverage or real estate that can draw equity from.

2. Family and Friends

The second most popular source of business startup money is from family and friends. They may be willing to provide a business startup loan or an outright gift due to the fact they believe in you and your business plan. The advantages of a personal loan or gift eliminate the bank paperwork, credit approval process and bank fees. A major drawback is that if the business falters your relationship with family or friends may not survive. This will certainly cause tension and negativity at the next family function.

3. Credit Cards

Credit cards provide instant money, and you can deduct the interest you pay if what you purchase is a business expense. Remember, easy money is harder to pay back. Most credit card money is lent at about 15 to 19 percent. Opening a business with this type of money can put you in a downward tailspin with no way out. A recent study stated that over 54 percent of businesses use credit cards in some capacity to get up and running.

4. Life Insurance Policy

If you hold a whole life insurance policy with at least three years of maturity, you can likely get a loan against the cash value of your policy. Most insurance companies will lend you up to 90 percent of your policy’s cash value at rates generally more attractive than those charged by credit card companies. You will continue to keep up with your premium payments on your policy.

5. Retirement Plan

Still working for a salon while starting a business? Then check into borrowing against your 401k. While rules vary, you generally can borrow half of what you have put into your retirement plan, up to a maximum of $50,000. The drawbacks when taking out the money is that it will be penalized and you will have to pay the taxes on the amount you take out of the 401k.

6. Finding funding on the Web

The internet has changed how business startups find new business funding. Numerous sites on the Web offer advice about how to put a business plan together and also connect you with various sources then can help you find the money needed to go forward with your business plan. Check out these sites: Bizoffice.com, Businessfinance.com, fundingpost.com, these sites allows you to search funding sources and access business guidelines. These sites will navigate you through a step by step guide to creating, supporting, and presenting your funding request.

7. Bank Loans

Bank loans are tough for any new startups to acquire. Usually banks loan money to companies that are stable and profitable and usually in business more than three years. Banks will also look for owners that have a proven track record and business background. They are not impossible to obtain but the requirements today are far more difficult. Make sure you have all your ducks in a row and have a complete business plan in order before approaching your banker.

8. SBA Financing

Depending on your credit record and the strength of your business plan, you may be able to secure a Small Business Administration Loan (SBA). These are loans guaranteed by the government. These loans usually have a better interest rate than a conventional bank loan and also have a longer payback term. Most bank loans are five year whereas SBA can be as long as ten years. This certainly takes the burden off of paying back the loan over a shorter period of time. This will make the first few years of business much easier not having such a large payment every month. The down side of SBA is the application process is very tedious, the completion intense, and the approval process can take up to 6 months before you get a response on your loan status.

9. Home Equity

If you own your home, you can take out a home equity loan, a second mortgage or refinance your original mortgage. Generally speaking, you can borrow as much as 80 percent of your homes equity. The most important thing to remember when you borrow against your home is if you should fail, the bank will foreclose on your home if you do not have the means to pay it back.

10. Leasing

Leasing sources can accommodate all applicants for financing whether you are in business twenty years or a new startup salon. The programs these banks offer gives you the flexibility to finance your equipment and installation. The application is less tedious then working with conventional banks. Once you fill out a lease application you should have an answer within 72 hours. The bank also does not put liens on your house or other assets. If you have been declined by a bank you may find it worthwhile to try a lease company.

11. Government related startup programs

There are many organizations whose sole purpose is to promote economic development or provide assistance to help particular types of people to succeed in business. Often this assistance includes financial support, such as startup business loans. Each state has programs that may be beneficial in a startup business. There are many women’s organizations throughout the country that cater to assisting woman trying to get in business.

12. Partnership

Partners can be a great source of financing support for a startup salon business. You will have additional capital as well as benefit from the skills and experience another individual brings to your business. This may be as financial support or being able to share responsibilities of running the day to day operations of the business. Conversely, you will have to share profits, and if the business does not work out, you will have to terminate your partnership and most likely your friendship,

Money is an important aspect for your business to succeed. Being able to obtain it without the restrictions of giving up your business or putting up your house as collateral is not going to be an easy task. Obtaining money with high interest rates will not make it easy for you in the early stages of business. All these factors are part of what you need to explore before embarking on the next steps of following your dream; opening your own salon business.

With just a modest down payment, some plans require no additional payments for several months, no matter how large the transaction. We also can customize payment structures to match your cash-flow projections or the seasonality of your business. You can proceed with confidence during those periods when you need to focus on building your business.

No transactional fees or hidden costs. Additionally, we can provide funding to cover the soft costs associated with flooring, lighting, decorating, delivery and installation fees.

Loan applications needn't be cumbersome, nor should they require excessive amounts of time to process. Because we understand your business, we can approve your application the same day you apply. Don't wait to start building the salon or spa of your dreams.