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Financing A
Start-Up Business
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Q.
I am attempting to start
a rent-to-own business. How can I go about obtaining financing to cover the
purchasing of the product, upfront, until we start receiving our payments? -
Shawn, MA
Advice
by Kathleen J Lauwagie, CPA
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Dear Shawn:
The very first step is to develop a well thought out business plan. No bank
will give businesses start up funding without it. The business plan will give
you several things such as; how much you will need to start, how much you will
need to have in revenue to make money, who your competition is, who is your
target market and much more. This will be your road map for your business and is
one of the single most important aspects of starting a business. Fail to plan,
plan to fail!
Next, you will need to put some of your own money down, usually about 10%.
Even the SBA requires that you put something of your own into the business. Most
people use savings or a home equity loan for this. Once you have these things
you might want to try for a Small Business Administration loan. The SBA
guarantees a good portion of the loan amount so that banks are more likely to
give startups the loans needed. The SBA website at www.sba.gov
has more on this. The Power HomeBiz site is a great place to get startup advice.
I send many of my clients there.
About the PowerHomeBiz.com Guide:
Kathleen J.
Lauwagie of Kathleen
J. Lauwagie, Ltd. is a small CPA firm providing accounting, tax, and technology
services to small businesses and individuals. We specialize in very small and
home-based businesses, therefore, we are familiar with the unique issues that
confront these entities. Visit her Web site at http://www.kjlltd.com/
The opinions expressed in this column are those of the
author, not of PowerHomeBiz.com. Users should not treat the Guide's response as
legal, accounting, or professional advice as all answers are intended to be
general in nature. Such advice can only be properly given by qualified
professionals who are fully aware of a user's specific geographical areas or
circumstances, such as an attorney or accountant.
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