Lately, it seems I have taken up the responsibility of convincing people to start their small businesses. I have posted many small business-related stories. Here’s another one, which tells you the sources and ease of receiving your start-up fund in the US. So, if you have a bright new business idea, like creating a new Facebook, Linked in or Pinterest Pinterest, you have ample options to secure your startup fund in the US.
Even if you want to open an Indian fast food chain in the US, there’s no dearth of options for you here. On that point, opening an Indian fast food chain is my dream…some day, some day.
If you’re interested in funding your start-up, US may be the right places for you to do so. Among the growing list of sources of funds for micro business and small business start-ups are major United States cities. The amounts of funding overall are not as great as the potential needs, but to the ever-increasing numbers of entrepreneurs seeking funds, it is a welcome sign of progress.
Major US cities have an interest in promoting new businesses and in providing increased levels of employment. Small businesses are an important source of jobs. Cities are well-positioned to take on the funding gap between resources available for existing small businesses and the much lower level of resources available for small start-ups. They have a direct stake in the level and quality of local services and the growth of local economies.
Even in Miami, where I live, I hear stories of new businesses opening every day on the public radio. More than state govt. or fed it’s the city management and municipalities that are promoting small business development opportunities by extending various soaps for the entrepreneurs.
Public Attention to Business Development
In the post–recession era, there has been a greater awareness of the role of business in expanding the economy and creating greater levels of opportunity. Partly due to austerity policies in various parts of the world, many economies have shown little or no growth.
Increasing the rate of new businesses can provide both jobs and economic growth. Consumerism is an important driver of economic growth in the United States and elsewhere. As sponsors of new businesses, Cities hope to expand job creation and spur additional local spending on goods and services.
The City of Chicago has approximately $700,000 for start-up funding in the current cycle and has invested more than $1.4 million in its microloan institute and local initiatives. Offering two classes of loans, the Chicago program caps lending at $25,000 for small businesses and at $250,000 for medium size firms. Across the United States, many other major cities have similar programs focused on the very small and newest start-ups.
Some states have passed or considered legislation aimed at improving small investment in start-ups. By authorizing local small business investment exchanges, these laws create investment opportunities. They would operate with lower levels of formality and professional services than stock exchanges.
Similar to Crowdfunding and Kickstarter sites, these investment exchanges would provide a method for small businesses and startups to reach out to small investors who would take a piece of the enterprise in exchange for financial support.
Bootstraps and Family
Owner financing is the most common source of start-up funding for micro businesses. Many of these businesses are sole proprietorships operated with the assistance of close friends or family members. The effectiveness of this source of funding depends largely on individual resources and effort. Statistical information suggests it is a major barrier to entry into the business and a limiting factor for business success.
Traditional bank financing is a major source of funds for new businesses and start-ups. The standards are demanding, and many well-qualified applicants do not succeed without further assistance. They can use public and private resources to strengthen their financial position. Some public programs provide secondary resources to reduce the risks of lending institutions.
These include tax credits, loan guarantees, and technical assistance. However, private banks are essentially asset based lending practices keyed to minimizing risk of repayment at manageable levels of bank debt servicing.
Angels and Crowd Sourcing
Many wealthy individuals act out of an intention to contribute to the public good by investing in worthy small businesses including start-ups. Many angel investors have extensive backgrounds and experience in business and select candidates with a view towards the likelihood of success and the contributions such successes might add to communities.
Crowdsourcing and Kickstarter sites offer a competition-based opportunity for applicants to persuade investors to act in their favor. Typically, investors do not take a share of the businesses in which they invest; the contribution is essentially a donation.
Alternative Finance Sources
Lenders and some major banks have combined to form a new generation of dedicated small business lending specialists. These firms have focused on asset-based financing for growth and operating capital.
It is part of the gap that cities wish to fill, the early development finding that moves firms to the point of operating and sufficient cash flow for long-term viability. While they are particularly strong sources of operating and growth financing, start-up borrowers must meet lending standards.
The federal government invests a substantial amount of resources for support systems and financial assistance for small businesses including start-ups. They offer technical assistance to strengthen management capacity and financial assistance to create greater levels of opportunities than traditional private sector business processes provide.
The list of resources committed to small business is impressive. It includes loan guarantees, tax credits for investors in targeted communities, and money dedicated to spurring investment companies and business innovations.
Operating a Business with Cloud Software
One major advantage in the current marketplace for starting a business is accounting and management software. In the early period of enterprise scale accounting and financial management software, the great-plains accounting software was one of the first widely used systems. By current standards, cloud-based systems far exceed the capacity of the early models.
Systems such as Sage One offer greater flexibility continuous access. They mesh with other applications. Unlike the Great Plains accounting software, they work well with a wide variety of businesses; they can grow with the user enterprise from micro businesses to complex medium sized firms.
Advanced Accounting Software
Today’s market is quite far advanced from the early era when Great Plains accounting software opened the possibilities of enterprise scale accounting and management software. Sophisticated, flexible, and versatile online systems such as Sage One are available for small and medium sized businesses.
Ideal for start-ups and small businesses, they work equally well with medium sized businesses and complex organizational models. To determine the best fit for accounting functions, invoice management, and enterprise software, companies can perform a demonstration session.
So, tell us how do you want to source funds for your startup? If you have already started what was your source? Let us know in the comment