Where’s the Money to Start a Business?

Written by Mary Welch Tuesday, November 17 2009

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There's good news and bad news about financing a business. First the good news: You've just come up with an idea for Next Big Thing. The bad news: You have no money to start a business and make your fortune.

The days of going off to the bank to get a lot of money to start or grow a business are in the past. Some say it never will be again. Let's just say, it's not as easy as it once was.

So, what a budding Kate Spade to do?

"Candidly, prepare to provide your own funding," says Stephen A. Bush, chief executive officer of the Leesburg, Ohio-based AEX Commercial Financing Group, which provides short- and long-term financing for small businesses. "That's a harsh perspective but the rules have changed so dramatically in the past six to eight months. Start-up entrepreneurs need cash. They need to be self-sufficient for the first year and, even better, the second. It's doable, but they're not going to get it from a traditional bank."

"There is money available at banks," says Charles H. Green, president of Sunrise Bank of Atlanta. "But it's much more restrictive, and even the guarantees are more restrictive. Banks are looking at start-ups from every facet and giving it a hard evaluation. There's a lot more requests being turned down, but there is money coming from the [government) stimulus."

Jean Holloway admits it is difficult getting money - especially for start-ups. "It is not the business of banks to decide what is a good new idea and what is not," says Holloway, executive vice president of the Bank of North Georgia. We don't speculate as to what idea will work and what won't. That is not our business now, nor has it ever been. That's not a new reality. And, there's a lot of businesses that banks have never sought out to lend money to - like restaurants and bars."

There are non-traditional ways to get money.

"One of the most overlooked sources of funding," says MaryAnn Shank, president of BusinessPlanMaster.com, "is credit unions. Most of them are actively searching out business investment. If your business has a story that they can promote to your community, go see them."

Another idea Shank suggests is bartering: "Those who have a talent for bartering and negotiating are way far ahead in the finance game. Anytime you can trade a service for a service, both services are ahead of the game."