How to combine sources of funding for starting a business

One of the biggest obstacles most people face when it comes to starting a business is funding. Starting a small business usually requires start-up costs in the thousands, and many people don't have the necessary funds already sitting in their bank accounts to start up a business.

For this reason, many people seek outside sources for funding in order to start their business. But even if this is the case, rarely will people get enough money from just one source. As a result, they will need to combine funding sources in order to pay for the start-up costs associated with starting a business.

There are a number of different options when it comes to funding a business. These can include, but are not limited to:

• Grants. Grants are the most difficult form of funding to obtain, but it's still worth a shot. Local and state governments often have specialized grants for business owners going into a certain field, or for minorities.


• Business loans from banks. While these are easier to obtain than grants or government small business loans, they can still be difficult. A bank will typically look at the five C's when determining whether to give money - capital, character, capacity, collateral, and conditions.


• Family members. Sometimes, family members will be willing to loan amounts of money to help you start your business.


• Credit cards. If you can't get money from any other source, but you've done your homework and are certain that your business will recoup its start up costs and then some, credit cards may be an option. Make sure you understand the risks and find a card with a low interest rate.

If this sounds complicated, it really isn't. The key to successfully combining sources of small business funding is organization. The following are some tips for combining your funding sources in order to start your business.

Keep detailed records.
This is especially important for those who have gotten financing from non-traditional sources, such as family members. Detailed records will help you to know where you stand in terms of loans and payments, how much you still owe, when your payments are due, and so forth. Keep a spreadsheet that lists the source of the money, how much you owe, dates of payment, and so forth. Meticulous records, including receipts of payment and cleared checks, can help prevent misunderstandings down the road.

Consider consolidating your debts.
If you have a lot of debt from different sources for your small business, you can consider consolidating them, so you will end up saving money each month (this ranges from a few dollars to much more). The convenience factor of only making one or two payments for your different sources of financing is also nice.

Know your limits.
This is especially true for those getting credit cards for funding their businesses. Many credit card companies take advantage of people and offer high lines of credit. Make sure you can cover the payments if you plan on opening credit cards to start your business, taking into account interest payments, which are often up to 20% and even more in some cases. Always make sure you are not getting more money than you can pay back.

These are a few tips for responsibly combining sources of financing for starting your small business.

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