Financing Your Start Up

Written by James Kitchens
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Many a budding entrepreneur has been faced with the situation where he has a brilliant idea for a new business. He may be bursting with enthusiasm for his idea, which is a surefire winner, but with no capital his plans are stifled. Often, banks and even finance companies will not consider start up ventures simply because the entrepreneur has no experience and is therefore an unknown quantity.

While most financing organizations will be more likely to grant a loan to an entrepreneur who has financed at least part of his own business, and who has been determinedly struggling along, it is possible to borrow all the money you need for a start up. When deciding whether, and how much, to borrow to finance your start up you need to take a close look at your circumstances. It will help to try and take a look at your plan as an outsider.

What Will a Lender Look At?

If you have no responsibilities (unmarried, no dependents), then you can probably afford to take the risk involved with starting up a new business. If, on the other hand, you have a family to consider, think about what might happen should your business fail. This hopefully will not serve to deter you, but perhaps to make you all the more determined to succeed with your business project.

One of the first things a potential lender will look at is your enthusiasm and commitment to your business plan. It will also work in your favor if you have set a limit to the debt you're willing to incur during the process of starting your business. If at least one of the partners in a new business venture is planning to keep a job until the start up is on its feet, this may also prove prudent.

Having a string of ready customers in the pipeline would be a definite advantage. This would prove to any potential lender that your business has the ability to take off. Some of the element of doubt would be alleviated. Meeting all, or at least some of these conditions will make it a lot more likely that you'll succeed in getting complete or partial financing for your start up.

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