Posts Tagged ‘financing’
Yes, Young Entrepreneurs Can Get Business Financing Too!
Friday, February 22nd, 2008
For young entrepreneurs, now may be one of the best times to start a business and convince investors that your idea is the next “big thing”. More and more young entrepreneurs are turning ideas into million and even billion-dollar businesses. Most have heard that Bill Gates was only 20 when he started Microsoft and that Michael Dell was only 19 when he started Dell. More recently, Sergey Brin and Larry Page were both 25 when they started Google, David Filo and Jerry Yang were 27 and 25 when they started Yahoo!, and Facebook was founded by Mark Zuckerberg when he was only 19. The list goes on and on.
No longer are teenagers and twenty somethings brushed off for their business ideas because they’re simply “too young”. If a young entrepreneur has a solid business plan and a thoroughly-researched business idea, there’s a good chance inside investors will be interested - knowing that when it comes to starting a successful business, age doesn’t always matter. However, not every young entrepreneur is the next Bill Gates, nor is every business idea the next Microsoft. So, getting funding isn’t as easy as stating “I’m in my twenties and I have a hot new business idea, want to invest?” But, unlike in decades past, being a young entrepreneur looking for financing isn’t necessarily a roadblock either.
There’s no doubt that young entrepreneurs will encounter more hurdles when trying to raise capital. Often times what’s lacking is a long credit history or enough work experience to obtain formal financing from a bank or credit union. However, there are plenty of other alternatives, such as:
Family and friends - It’s no secret that many young entrepreneurs got a loan from mom and dad to start their first business. They may have had the idea of “doing it on their own”, but the reality is that it’s very tough for someone in their teens or twenties to get a traditional loan without being a homeowner. So, put together a solid business plan, wow your friends and family with your ideas and you might just find them jumping at the chance to back your new business.
Angel investors - An angel investor is an individual who invests their money in a start-up company. This could be a friend of a friend, the owner of your local grocery store, the family lawyer, etc. If you’re interested in finding an angel investor, then create a list of wealthy individuals that either know you personally or know a close friend or family member of yours personally. Make sure your business plan is detailed and concise, and work on your one minute “elevator pitch” to convince them each to give you a twenty-minute meeting.
Venture capitalist - Working with a venture capitalist company can be great in that they not only provide financing, but they use their experience to help you get your idea off the ground and take it to the next level. Venture capitalists are interested in big, million-dollar ideas though, so if you’re looking to open a local pizza shop, a venture capitalist firm is probably not the best place to look for financing.
Credit cards - The good thing about credit cards is that virtually anyone can get one (or two or three). The bad thing is that they can spiral you down into a pitfall of debt very quickly, possibly compromising your future ability to obtain traditional financing. For young entrepreneurs, using credit cards to finance a new business is very dangerous. With no money coming in for months, your debt will continue to rise at a rate that’s hard to keep up with. While plenty of successful businesses got their start on credit cards, many more businesses failed, leaving the founders in serious debt; so make sure to use credit cards carefully.
So, don’t think that being young is a disadvantage when trying to raise capital. Use your youth to your advantage and get potential investors excited about your business idea. Show them that you have done the research and that you have the energy, motivation and enthusiasm to get your idea off the ground and their money back in their pockets with some nice profits!
Tags: advice, Carrie Hinkel, Finance, Finance and Accounting, financing, small business loans, young entrepreneurs
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Minority Business Loan Programs - A Primer
Thursday, January 10th, 2008
The political picture of the world we live in today, at least in North America, has forced people to recognize that some individuals may be at a disadvantage when it comes to making money.
For this reason, several laws and organizations have been set up in order to ensure that minority groups, including women, have access to the wages and funds they deserve.
In fact, the government has stepped in and specifically developed a plan to assist minorities and women in setting up their own business. The program is developed and run by a federally created body known as the Minority Business Development Agency .
It is this agency which runs the different centers across the country from which entrepreneurs of different minority backgrounds, as well as women, may turn in order to start and grow a business.
There are several services which the MBDA and its various centers provide, but the most frequently used is their loan program. It’s important to note that these are not grants but loans; as with any loan, they must be paid back to the lending agency within a certain time period. These loans can be used to start up or to expand a business that is owned primarily by a woman or a person of a visible minority.
The loans themselves vary in size, and will usually be determined by the credit history of the person applying; again, no different than any other type of loan. First, though, you will have to put together a loan application package for the Small Business Association. There are a few specific criteria:
* You must have already been turned down for a regular loan by a bank or lending company.
* A guaranty is required.
* The business must operate in the United States.
The loan may be approved for up to $250,000, and terms range from five to twenty five years.
Once you have been approved by the SBA , the next step is to once again return to the lending companies (remember, you will have had to have been turned down by these people once already). With your approval from the agency in hand, you will have little trouble getting approved this time, particularly from banks with a commitment to the minority business development, such as Wells Fargo.
Any lending company who you approach needs to be approved of by the SBA, which is a great way of getting your short list together. Most will have their own set of further criteria, so make sure you look at that before going in.
A minority business loan makes it a little bit easier to expand or start up a business if you are a member of certain groups. It is well worth taking advantage of, as it is a resource that other businesses do not have access to.
Tags: Finance, Finance and Accounting, financing, Leeia Ladipoh, loans, minority loans, small business loans
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