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Financing
 The ability to raise money, or capital, is essential not only for starting,
but also for maintaining and expanding a healthy business. No matter
how good your concept or your business plan, it will fall flat without
the proper financing, the lifeblood of any enterprise.
Before you begin your search for capital, you will need
to know how much money your business will require. To get an accurate
answer you should consider not only the costs of starting, but also
the costs of staying in business. Many businesses take a year or two
to get up and running. This means you will need enough funds to cover
the cost of materials, salaries, rent, supplies and other items until
sales can meet these costs. Your comprehensive business
plan should help you determine how much capital you need.
It is common for many new business owners to furnish a
substantial amount of capital - from 20 to 50 percent - from their own
resources. Besides tapping into your own funds, you may also consider
approaching family and friends. Other sources include retirement income,
the income of a spouse, your income from a part-time or full-time job,
investment by partners and incorporations and sale of stock.
There are many different types of
lenders and lending programs.
- Most commercial banks will facilitate the financing of well-managed,
credit-worthy small businesses and strive to give them the help they
need. However, you may also want to consider savings banks and saving
and loan associations for small business loan services.
- The New
York State Banking Department web site has a source book of private,
public and non-for-profit small business assistance programs in New
York State. The site has both financing and technical assistance information.
- US Small
Business Administration (SBA) offers small businesses a way to
access commercial loans over longer terms and for larger amounts than
traditional lenders. Many lending institutions will not lend long-term
credit to a small business, but in a SBA-guaranteed loan, the risk
is shifted from the lender to the SBA.
- New York
Business Development Corp is a privately-owned company in which
New York financial institutions pool their resources and share risks
to help diverse small businesses obtain financing to expand in New
York State.
- The Community
Development Financial Institutions Fund was created to expand
the availability of credit, investment capital, and financial services
in distressed urban and rural communities.
- The New York City Financial Network Action Consortium (NYCfNAC) was established to provide banking services to businesses in New York City's low-income communities.
- Venture Capital
funds invest in promising companies that have potential for future
profit, but often are not profitable yet. Venture capital funds provide
emerging enterprises with capital, in return for debt or partial ownership.
A high rate of return over a relatively short time frame is typical.
Refer to Venture
Capital in Growing A Small Business for further information.
Refer to Business
Plan and the "Your Business"
guide for further information on financing your business.
For technical assistance on
what financing is best suited to your particular business, contact your
nearest New
York State Small Business Development Center or Empire
State Development
Entrepreneurial Assistance
Program (1-800-STATE NY).
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