Using Personal Funds

Depending on how much cash you need (and how much you have), you may find that using personal funds is the best option. Over 50% of small business start-ups are financed with personal funds. If your business doesn't require producing a product, or hiring employees, or renting an office, then you probably can get along fine without much in the way of financing. But, remember our list of operating expenses from the last session. Your business is going to need some form of sales or marketing, which means advertising, which means spending money. This means you go into your savings account, take out a second mortgage or home equity loan, get a personal loan, or dig up that jar buried in the back yard.

A home equity loan is a low-risk, relatively simple way to secure funding for your business. The bank doesn't really care what you are using the money for, and you'll be financing your business yourself. Often, having a larger financial investment in the business personally will have more weight when you're trying to get a business loan.

A personal loan is also a possibility, but make sure you let the bank know that you plan on using the money for your business.

Or, use the Spike Lee method and start taking advantage of some of those pre-approved credit cards you get in the mail every day! Hey, it can work -- just make sure you check out the interest rates, annual fees, and late fee charges.

If yours is a simple business, you could also bootstrap it. This means that, with a very small investment, you get the business going and then use the profits from each sale to grow the business. This approach works well in the service industry, where start-up expenses are sometimes low and you don't need employees initially.