“All entrepreneurs have to overcome hurdles when it comes to finding capital for their new business. When customers are few, earnings are scarce and business assets are immaterial, it takes energy and creativity to locate the necessary funds. And these challenges are heightened for entrepreneurs in their 20s, who are often involved with their first formal business venture or just out of school with limited work experience.

When it comes to bank loans, you’re required to have a good credit history, submit a personal financial statement, and sometimes make an equity investment in your business–all of which may not be easy for most young entrepreneurs to accomplish. For example, a few stains on your credit report from late payments in college could hurt your loan application. And since most twenty-somethings don’t own a home or have much equity built up, relying on home equity lines of credit is also not an option.

So the fallback position for many young entrepreneurs is to get bank financing in the form of credit card debt. As I’ve written in previous columns, this is a dangerous path to go down if your business is in its startup stage and your earnings are unpredictable. Instead, I would recommend getting a debit card rather than a credit card for the first few months of business startup until you’re confident that you can forecast earnings and until you develop the habit of making your payments on time. I’d also caution young entrepreneurs from using more than $5,000 per month on their debit or credit card. Anything over that will put you in a different risk category with most credit card companies and, if you end up in delinquency, could really impact your ability to get future financing……”

Read Full Article from Entrepreneur.com

“How to Find Money for Anything

Despite the tumultuous and unpredictable state of today’s capital markets, entrepreneurs still have plenty of ways to raise funds for their companies. Here are 20 that offer particular promise in the current economic climate. Some represent new marketplace solutions to the perennial financing problems of business owners; others offer new twists on time-tested strategies or financing tools. But don’t get us wrong–we’re not suggesting that you overlook traditional financing strategies, such as approaching angel investors or proposing financing deals to your customers or suppliers.”

Click Here for the 20 Tips for finding money. 

Entrepreneur.com 

“If your new business is like most startups, you’re seeking somewhere between $5,000 and $50,000 to get it off the ground. After exhausting your personal savings and loans from relatives and friends, your first instinct might be to get a bank loan or an SBA loan. Before you act on this instinct, let me tell you about three common misconceptions about bank financing for business startups.

1. If you need money, you can get a loan from the SBA. Type “SBA loan” into Google, and you’ll find hundreds of websites purporting to facilitate loans from the SBA. The fact is, the SBA doesn’t make loans. Visit the SBA’s website, and it clearly states that the organization is not in the business of making loans.

Instead of direct lending, the SBA provides credit guarantees to banks and other institutional lenders who provide loans to business owners. The credit guarantee enables banks to make loans that are somewhat more risky than they would otherwise make. (Read this column for more details on SBA financing.)

In the past year, there have been many new developments regarding SBA financing including the proposed elimination of the Microloan program for loans under $35,000. If you’re seeking a small loan, you should be aware of these developments by reading about this topic before approaching your banker to request a loan application. Typically, the SBA guarantee cannot by used by startup businesses without three years of sales history.”