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Startup Capital For Small Businesses
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Government loans by the Small Business Administration are one of the most valuable sources of startup capital for small business entrepreneurs.

Since its inception in 1953, the SBA has provided startup capital for several thousand small businesses. In fact, SBA has financed more than 219,000 business owners with loans of more than $ 45 billion. The role of the SBA in providing startup capital to small companies has increased in the last decade. In the past 10 years, SBA has provided startup capital for almost 435,000 small businesses with more than $94.6 billion in loans. SBA is probably a leading source of funding for small businesses. However, before approaching the SBA for startup capital, entrepreneurs need to estimate how much they need for their business. Every business is different, and has its own specific cash needs at different stages of development. Some businesses can be started on a shoestring budget, while others may require considerable investment in inventory or equipment. It is vitally important for entrepreneurs to estimate how much startup capital they need.

A realistic budget for startup capital should include those things that are necessary to start that business. These essential startup capital expenses can be divided into two separate categories: fixed and variable. Fixed expenses include rent, utilities, administrative costs, and insurance costs. Variable expenses include inventory, shipping and packaging costs, sales commissions, and other costs associated with the direct sale of a product or service.

The most effective way to calculate the expense for startup capital is by maintaining a worksheet that lists all the various categories of costs. The advantage of applying to the SBA for startup capital is that it is more flexible than other loans offered by traditional lending institutions such as banks.

Entrepreneurs applying to the SBA for startup capital need to meet some minimum criteria. Business owners will need to furnish details of business profile, loan request amount, collateral details, business financial statements and personal financial statements.

Most analysts suggest that entrepreneurs should get pre-qualified for the startup capital. Pre qualified financing uses intermediary organizations to assist prospective borrowers in developing viable loan application packages and securing loans.

The SBA is one of the most promising sources of startup capital for small business entrepreneurs. Business owners should think of it before venture capitalists and angel investors when seeking startup capital.

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