Where to Look for Startup Financing

From Taking an Idea to Market, by Molly Tschida Brennan, in NAWBO's Entrepreneurship Trilogy

This is not your mother's woman-owned business. The number and size of women owned businesse have increased significantly in recent years, and today's women-owned firms generate $2.3 trillion in revenues and are just as financially strong and creditworthy as the average U.S. firm, according to the Center for Women's Business Research.

Yet, many women still have trouble financing their businesses. According to a 2002 survey conducted by the National Women's Business Council, more than half of women business owners found it difficult to secure capital to start their businesses. This hasn't stopped an increasing number of female entrepreneurs from striking out on their own. Between 1997 and 2002, the number of women-owned firms in this country grew by 11 percent, and an average of 424 new women-owned businesses were started every day, reports the Center for Women's Business Research. In all, there are about 10.1 million firms that are at least 50 percent owned by a woman or women.

Clearly, there are ways around the financing hurdles. Whether you're starting a small, home-based, service business, or a high-growth manufacturing business, there are plenty of financing options out there. The trick, our experts say, is doing your homework and knowing where to look.

Case Study

Ice Tubes Inc.
Mogadore, Ohio
Pam Moore, Founder and CEO
Year founded: 1997

It was 2002, and Pam Moore, founder and CEO of Mogadore, Ohio-based Ice Tubes Inc., had finally hit it big. Moore's company, which manufacturers and sells trays that make ice cube-like cylinders slim enough to fit in bottled water and sports drinks, had just received $1 million in purchase orders, including a large national order from retail giant Wal-Mart. Moore realized she needed to ramp up production and, consequently, would need cash flow--lots of cash flow. Yet, she was rejected by not one, but six banks when she applied for a loan.

"You've got to be kidding me!" Moore recalls thinking. "Here I've got $1 million in business, and I can't even get a loan!"

It had been a long journey from soccer mom to president of her company, and Moore couldn't believe things were grinding to a halt just as she seemed to be hitting her stride. What was especially frustrating for Moore was she had come so far with so little outside assistance. Now, when she needed it most, she found herself shut out.

Moore started her company back in 1997 with little more than a moment of inspiration. A mother of two, Moore spent a lot of time freezing half-filled bottles of water to keep her son's water cold for his soccer games. On one particularly frustrating day, she forgot to freeze the bottle the night before and struggled to cram square-shaped ice cubes into the bottle. 'I can't believe there's not a better way to do this!' Moore thought to herself. That's when the light bulb went off and Ice Tubes was born.

Moore began experimenting with ideas to make smaller, thinner ice cubes, and created her first homemade prototype using syringes filled with water. She took that prototype to a local attorney, who told her he thought she had a patentable winner. It seemed as though Ice Tubes was starting to crystallize. So while her attorney started her patent application, Moore got serious about the Ice Tube design.

Moore has a business degree from the University of Akron and had worked as a college recruiter and in real estate, but when it came to product design and development, she was in unfamiliar terrain. Undeterred, she picked up the phone and started cold calling industrial designers, prototyping companies and manufacturers. Mostly, her calls were met with disdain and disinterest, and it was weeks before she found a firm, Colonial Patterns in nearby Kent, willing to work with her on a prototype. She then tapped all of her personal savings and sold some real estate investments to bankroll her fledgling company.

Moore recalls the day she excitedly walked into her manufacturer to watch the first Ice Tubes tray come off the press. Instead, she found the press manager prying the tray from the press with a crow bar. The manufacturer spent the rest of the day experimenting with numerous plastics before finally finding a winning combination. Moore took that first tray home, only to find the ice cubs wouldn't pop out. The $30,000 mold was useless.

Moore was frustrated, and a little nervous. Because while the Ice Tubes design was still being perfected, Moore was out selling her product to the nation's largest grocery store chain, The Kroger Company. Before a single Ice Tubes tray existed, Moore had purchase orders totaling more than 50,000 trays.

Needless to say, there was significant pressure to finalize the Ice Tubes design and begin production. Back at the drawing board, Moore and her manufacturer discovered that the mold's rounded bottom was serving as a vacuum holding the ice in the tray.   Eventually they came up with a tray that had a detachable bottom. Finally, in May of 1999, Moore had a workable mold, and Ice Tubes was on its way.

Business was brisk from the start and Moore sold several hundred thousand trays in her first year of production. On top of her own marketing and sales efforts, Moore got a big boost from an unprecedented amount of free publicity: she was profiled in local newspapers and her product featured in The Washington Post , the Los Angeles Times , the Dallas Morning News , Good Housekeeping , Self , and Working Mother . This helped her make gradual, yet steady, inroads with local and national retail chains. In 2001 Wal-Mart agreed to let her test market Ice Tubes in 60 stores across the country. She even did a cross-promotion with Ice Tubes and Coca Cola's PowerAde sports drink in a Dallas-area Wal-Mart.

At the same time, Moore lost one of her largest accounts, Lechter's Housewares. They filed for Chapter 11 owing Ice Tubes almost $100,000. Although it was devastating at the time, it taught Moore that large companies are not invincible, and she should only extend credit to the extent that she could absorb the loss. Around this same time, Moore was receiving a large purchase order from Kmart. While the prospect of doing business with Kmart was exciting, Moore had heard they were slow in paying their vendors. She decided the risk was too great and she walked away from the deal. Two months later, Kmart filed for bankruptcy protection. While Moore could absorb the Lechter's loss, the Kmart loss would have put her out of business.

During this time, Moore stayed ahead of her expenses by requiring payment within 30 or 60 days with retailers, and 90 days with her manufacturing company. She also obtained a loan and revolving line of credit to expand her business. She had a few problems with quality and inventory control, and had to switch manufacturers more than once; but for the most part, Ice Tubes was succeeding beyond her wildest dreams.

Then, in 2002, Moore hit the big time: Wal-Mart placed its large national order and several other customers simultaneously increased their others. With more than $1 million in orders, Moore increased her production and manufacturing, but needed cash to cover her short-term expenses. She headed to her bank to tap her loan and line credit line, but was dismayed to learn both had been cancelled. The bank said it had been burned by too many small-business defaults and so cancelled all high-risk credit.

Shocked but determined, Moore applied for a loan at another local bank. And another, and another... In all, she heard 'no' from six different banks. Unwilling to halt production and cancel the orders, Moore went without pay and used faith and credit cards to carry her through. Finally, she found a local lender participating in the U.S. Small Business Administration (SBA) guaranty program. Through the guaranty program, the SBA shares the risk of the loan with the bank. Moore quickly applied and was approved for a credit line of $100,000 and a business loan of $250,000.

The loan helped her through the production crush, and today her product is available in Wal-Mart and several other national retail chains, including Krogers, Linen's N Things, Giant Eagle, Bed Bath & Beyond, and Kitchen Collection.

By the end of 2003, Ice Tubes had sold more than 2 million trays. Moore was recently recognized by the SBA as small-business person of the year for northeastern Ohio, and she received the Ohio Governor's 2003 Rising Star Award for Excellence In Enterprise. Ice Tubes recently rolled out a new product, Ice Tubes Singles, which come in packs of 16 or 10, and Moore is very excited about a soon-to-be-introduced new product line that has nothing to do with Ice Tubes.

As far as advice for other entrepreneurs, Moore says: "I believe faith and perseverance can overcome any obstacle, and when you make mistakes, and you will, remember that tomorrow is a new day.   Focus your energy on positive action and what you want, and the rest will eventually come together."

While Ice Tubes rapid growth and success may be unusual, Moore's difficulty obtaining outside financing is not. While more women business owners have bank credit than in decades past, they still lag their male counterparts in the amount of capital available to them: in 1998, 34 percent of women had bank credit of $50,000 or more, compared with 58 percent of male business owners, according to the National Women's Business Council.

Another less obvious, but equally important factor influencing women's source of financing is the fact that many female entrepreneurs are reluctant to seek outside financing, our experts say. Women tend to be risk averse and so prefer to keep business expenditures and growth at a more manageable, less costly level. Plus, many entrepreneurs, no matter the sex, are reluctant to share their "baby," and avoid financing arrangements that would force them to give up equity.

As a result, many women, including Moore, rely on personal savings and charge and credit cards to start their businesses. In fact, credit cards and personal savings are the main source of financing, according to a NAWBO survey. That said, there is nothing wrong with limiting financing to savings and credit cards, our experts agree. For many women, it provides sufficient seed money and doesn't relinquish control of the company.

If, however, your business idea is a high-growth, cash-intensive concept that will require significant startup funds, you need to understand other financing options. And if you envision using credit cards to get yourself up and running, but plan on tapping other sources for expansion, as Moore did, you need to understand the full gamut of financing options. Read more about the most common types of funding to learn which is right for you.

First Steps

Before you start the money hunt, make sure your business plan is polished and up-to-date. Even more important, be prepared to summarize your business plan in a 60-second pitch.

"Whether you're seeking a bank loan, working with a venture capitalist, or talking to a friend or neighbor, you have to be ready to explain why you are a good investment," says Whitney Johns Martin, founder and CEO of Capital Across America, a Nashville, Tennessee-based Small Business Investment Company (SBIC) that funds women-owned firms. "Most women gear their 60-second pitch toward how great and wonderful their product is, but that's not the story you need to tell your potential investor. They want to know how they will benefit by investing in you."

Once you've fine-tuned your pitch, determine exactly how much money you need and create a detailed plan for how you will use it. Any potential lender or investor will demand to see this, and figuring out your long-term needs and goals ahead of time can help you narrow your financing choices. For example, if you know you only need $15,000, you might not bother applying for a bank loan. If, on the other hand, you anticipate rapid growth and major expenditures, you might want to get a credit card for everyday expenses and obtain a bank loan for larger expenditures.

"One of the most important things women entrepreneurs need is an understanding of how much money they need to succeed--not how much money they need to get by, but how much they need to really succeed," says Nell Merlino, co-founder and CEO of Count Me In, a New York-based organization that makes small loans to women entrepreneurs.

"You might think, 'If I just had $1,000, I could do this,'" she says. "But what if you started thinking about what you could do with $5,000, $10,000, $20,000 or even $100,000?   It makes you think about growth and all the things that go into making a business successful in the long term."

Next, determine what time of financing you are looking for, equity or debt financing. In simplest terms, equity financing requires you to give up a small stake in the company in exchange for cash; in debt financing, money is borrowed with the agreement that it will be repaid with interest. You will also likely need to put some collateral up against the loan, such as your house, business equipment, etc.

Most startups prefer debt financing, but if you are seeking a large amount of capital or are already debt heavy, you may want to consider equity financing. If you need advice on which type is most appropriate for your business, take advantage of the free counseling available at your local Small Business Development Center (SBDC), Women's Business Center or SCORE chapter. All are affiliated with the U.S. Small Business Administration and staffed by seasoned professionals.

Finally, you need to establish yourself as credit worthy and credit ready. Many married women entrepreneurs realize that they have poor or no credit because their assets (house, cars, etc.) are jointly owned with their husbands. If you don't already have a credit card in your own name, apply for one. Even if you don't intend to use the card to finance your business, it will help you establish a credit rating.

It might be worth your while to obtain a copy of your credit report. Any bank or lender will run a credit check, and it's best to know ahead of time if there are any potential problems. Some red flags are simply misunderstandings that you could clear up before your credit report is in the hands of a potential lender.

If You Believe in Yourself, Invest in Yourself

If you've had your business idea for a while, maybe you've been putting a little extra away each month, saving for the day you could strike out on your own. If you've got personal savings to invest in your new business, great, but not everyone does. Consider these alternatives:

Do you have any assets that you could sell--a second car, a vacation property, jewelry or home furnishings? Can you lower your monthly expenses and free up more cash by refinancing your home? Or, consider borrowing against your home, a scary but often practical option. You're not necessarily putting your house up as collateral, you're borrowing against the equity you already have in the house.

Many first-time entrepreneurs are reluctant to take this risk, but you might not have the luxury of being so selective, says Patti Greene, dean of the undergraduate school at Babson College. Babson was recently ranked the top school in the country for entrepreneurship and Greene, a leading authority on access to capital, is co-author of the new book Clearing the Hurdles : Women Building Growth Businesses.

"If you want to succeed, you have to be willing to take some risks," she says. "And if you don't have enough faith in your business to put your own money in, why in the world would somebody else put their money in?" she asks.

Investing your own money now will become important down the road if you plan to seek additional capital from a bank or other lender. While Moore was rejected by one bank because it didn't like that she was foregoing a salary and investing her own money, many loan programs require the business owner invest her own money, and lenders tend to look more favorably at an applicant who has a significant personal investment in the business.

The Importance of Friends and Family

After you've exhausted your own resources, it's time to turn to your family and friends. A $2,000 gift from a loved one or a $5,000 loan from a friend could be enough to get you started.

"People will invest in you because of your relationship with them and their belief that you will work hard and do a good job," Johns Martin says. "When you're a new entrepreneur, it's very difficult for someone who does not know you to make that leap of faith. That's why you need to first go to people with whom you have an existing relationship--your friends, family or people you've worked with."

In these cases, it's usually best to accept a loan rather than give up equity. (Do you really want your mother having a say in how you run your business?) And even if the money comes from your mother or dearest friend, it's best to have a written agreement. If your mother is offended, simply tell her it's something your lawyer recommended and you're sorry, but you don't have a choice. A simple written agreement can save feelings and money down the road. When your company makes $20 million, is your uncle Leo going to claim his small loan makes him part owner?

Charge!

When it comes to your personal finances, you've been told over and over to keep your credit card debt to a minimum. Always pay more than the minimum and don't shift balances from card to card, you'll only end up paying lots of unnecessary interest, financial advisors say. But when it comes to financing your business, credit cards can be a girl's best friend.

A 2002 NAWBO survey found that credit and charge cards are the top source of businesses financing. In fact, 65 percent of NAWBO members reported using credit cards, up from 57 percent in 1998 and 51 percent in 1994. A credit card (or two) with a $10,000 limit could provide you with enough working capital to purchase equipment or furniture, pay for your first marketing campaign, or, as in Madzel's case, make payroll in an emergency.

"There are times in our economy when a credit card offers the lowest available interest rate," Greene says. "If you use credit cards, you need to pay close attention to the rates and manage the debt very carefully, but it shouldn't be discounted as a viable financing option. It's not necessarily more expensive than other types of loans."

In 1987, when Malynda Hawes Madzel started Custom Telemarketing Services from her basement, she didn't even have a credit card in her own name. But Madzel knew she had a talent for telemarketing and was sure her business-to-business telemarketing firm could succeed. After being rejected for a business loan, Madzel applied for a credit card through her local chamber of commerce and used it, along with personal savings, to cover startup costs and even payroll later on.

Ten years later, Custom Telemarketing Services was booming, with as many as 35 employees and 20 clients at one time. Yet Madzel had done it all without a single commercial loan or professional investment. It wasn't until 1996 that she got her first business line of credit for $25,000. Since then, the business has continued to grow and thrive and Madzel has been recognized many-times over as an innovative entrepreneur.

To keep your businesses expenses separate from personal expenses, be sure, as Madzel did, to open a separate credit or charge card just for business purposes.

Bank Loans: Tried and True, but Not Always Approved

Banks and credit unions are common sources of business funding, yet only 20 percent of NAWBO members report using a commercial bank loan to finance their business. That's because these traditional lenders typically have a rigorous application and approval process, and many new businesses simply don't have the collateral or financial statements to meet their standards.

The Women's Business Development Center (WBDC) in Chicago is one of the oldest and largest women's business assistance centers in the United States. The WBDC (www.wbdc.org) promotes economic development through entrepreneurship and offers women business owners counseling, training, and financial advice. In fact, the has helped women-owned businesses secure more than $35,000,000 in loans since its founding in 1986. To help you determine if you are likely to qualify for a business loan, the WBDC put together this eleven-point checklist:

1. Do you have a good personal credit history?
2. Have you filed your personal and business income taxes?
3. Are your income taxes paid?
4. Have you demonstrated that your business has the ability to repay a loan?
5. Does your business have a positive net worth?
6. Is your business not carrying too much debt?
7. Do you have enough money of your own put into the business?
8. Do you have any collateral to secure a business loan?
9. Are you willing to personally guarantee a loan?
10. Does your business have managers and advisors capable of leading your business to the next level of growth?
11. Do you have experience in running your business?
12. If you can't answer "yes" to each one of these questions, you will probably have difficulty securing a bank loan. If, however, you've answered 'yes' to the above questions, and have confidence in your business plan and financial projections, it's time to prepare your loan proposal.

Remember that first and foremost, the bank wants to know if you will be able to repay the loan, and in your proposal they are looking for proof that you are a sound investment. At a minimum, the WBDC recommends your proposal include:

• Your business plan
• A current income statement and balance sheet
• Cash flow projections for one year, by month (with income and expenses detailed)
• Projected profit and loss for two years
• Articles of Incorporation
• Your resume
• Personal financial statements
• A credit report
• Personal income tax returns for the past three years
• Business income tax returns (if your business has existed long enough to file taxes)
• Information on existing business debts
• If after all of this your loan application is denied, don't take it personally--and definitely don't give up on your dream. Instead, ask the loan officer for details about why you were rejected. Maybe you need to tweak your projections or provide more documentation and some simple changes will make your application more likely to be accepted the second-time around.

If at First You Don't Succeed, Let the SBA Help

"If you walk into a bank looking for a $30,000 loan, and you get that loan, then you don't need the SBA," Melanie Sabelhaus, deputy administrator of the SBA, likes to say.

But if you are turned down, an SBA loan-guaranty program could help you get the financing you need. The SBA offers a variety of loan programs to help small businesses, but doesn't do the actual lending. Mostly, the SBA acts as a guarantor of loans, pledging to share the risk with the bank if you default on your loan. There are different loan programs, with different terms, guaranty levels and requirements for use, but the most popular is the 7a Loan Guaranty program. This program guaranties term loans of up to ten years, with average loans of about $35,000.   In fiscal year 2003, the SBA guarantied more than 67,000 general business loans totaling more than $11.3 billion. Many of those were to startups that did not qualify for conventional loans.

"That's the beauty of the SBA," Sabelhaus says. "We're there when the bank says no."

One reason Ice Tubes' Moore says she didn't seek an SBA-backed loan immediately is that she had heard the application process was cumbersome and difficult. In reality, she says, it was no more complicated than a conventional application and she had a response much sooner than expected. Sabelhaus hopes to spread Moore's story and let people know the SBA is not the bureaucratic behemoth they fear. In fact, the SBA offers a new program with an online application and a 36-hour response time. The loan is still applied for and processed through a traditional lender, but with a much faster turnaround time. Through SBAExpress, the SBA will guaranty 50 percent of a general-use loan up to $250,000.

To learn more about all the SBA programs and local lenders participating in the guaranty program, visit www.sba.gov.

Rejected and Dejected? Microloans and Other Alternative Financing Sources

"Which came first? The chicken or the egg?" is a conundrum many entrepreneurs can relate to. In order to qualify for a loan, you need to have a proven track record; but in order to establish a track record, you need the help of a loan.

For many first-time entrepreneurs, microloans are the solution. Microloans are very small (usually $100 to $35,000) loans from community organizations to small-business owners who don't qualify for more traditional loans because of poor credit or little collateral. The SBA makes funds available to nonprofit, intermediary lenders through its Micro-Loan Program. The lender--not the SBA--then establishes its own loan terms and uses its own credit rating system, usually one more favorable to startups. Most microloans are term loans with higher interest rates than standard business loans and require some type of collateral or personal guaranty from the business owner. A complete list of SBA-affiliated microlenders is available at www.sba.gov /financing/microparticipants.html.

There are also independent, nonprofit microlenders, such as Merlino's Count Me In. This national organization, on the Web at www.count-me-in.org, offers business counseling and loans of $500 to $10,000 to women-owned enterprises. The first loan must be $5,000 or less, but each time a loan is repaid, the borrower is eligible to apply again. Count Me In relies entirely on donations for its funding and uses a woman friendly credit scoring system. For example, the online loan application doesn't ask how long the company has been in business, but rather how long the owner has worked in the industry.

"We recognize that there are some women out there who don't have good personal credit, don't have friends or family they can go to for money, and don't qualify for a traditional loan," says co-founder and CEO Merlino. "These might be women with 20 years of business experience, but they don't qualify for a bank loan because they've never owned a business before. We exist to fill that gap."

The Association for Enterprise Opportunity at www.microenterprise.org is a good source for information on microlenders. The association represents microenterprise development programs (private, nonprofit organizations that support startups with counseling and microloans) and can help you locate a microenterprise organization near you.

Is your business in a low-income area or will it create jobs for low-income individuals? If so, a Community Development Financial Institution (CDFI) could help you. CDFIs are private, financial intermediaries that give credit and loans to new businesses that encourage community and economic development, but are considered high risk by traditional lenders.

Finally, your local SBDC is a good clearinghouse for alternative financing options. For example, there are a number of local, regional, state and federal loan programs your business might qualify for if it is an underserved, rural or low-income area. You can find the nearest SBDC by visiting www.sba.gov/sbdc.

Talk to a Professional: Venture Capitalists and SBICs

In the heady, dot-com boom days, it seemed venture capitalists were on every street corner, throwing cash at anyone and anything that called itself a startup. Today, the world of professional investing is significantly more reserved, and venture capital is not so easy to come by.

Venture capital is equity financing for young, rapidly growing companies that have even bigger growth potential (projected annual revenues of $25 million or more). Most venture capital comes not from wealthy individuals, but from venture capital firms that invest in a portfolio of young companies. The number of companies that seek venture capital is very small, and the number that receive it is even smaller: In 2003, there were 2,779 venture capital investments, with an average investment of $6.5 million, according to the National Venture Capital Association (NVCA).

Clearly, venture capital is not for the average startup. The stereotypical venture capital recipient is a high-tech firm in Silicon Valley, but in reality, venture capital firms invest in life science, industrial products, construction, communications and business services companies all over the country. The common characteristic is growth potential.

Typically, the earlier you receive venture capital money, the more equity you have to give up. (Because your company is untested, the investor's risk is higher and the rewards must be greater.) But you shouldn't view the loss of equity as a hardship, says Babson's Greene. Management and business counseling is a key component of any venture capital deal, as it's in the best interest of the investor to help the company grow and succeed.

"If all you get out of a venture capitalist is money, you didn't go to the right venture capitalist," Greene says.

If you decide high-growth and professional investors are for you, your first stop should be the NVCA website at www.nvca.com. The site provides an overview of the venture capital industry, a calendar of upcoming venture capital fairs and a listing of the nation's venture capital firms (available for purchase). The listing, which includes short summaries of each firm, can help you focus your search. Venture capitalists are highly selective and you shouldn't waste your time on a firm that has no interest in your business. Instead, target firms that specialize in your industry, stage of development or region.

If you think you have a high-growth business, but need help connecting with investors, check out New York-based Springboard Enterprises (www.springboard enterprises.org). This national, not-for-profit organization helps women-owned firms gain access to the professional investor community. Springboard produces programs that educate and showcase entrepreneurs, including the Venture Forum, a six-month long training and coaching program that culminates in a venture capital fair.

You should also visit www.sba.gov/INV to learn about the Small Business Investment Company (SBIC) Program. SBICs are privately owned and managed venture capital funds that are licensed and regulated by the SBA. They use their own capital, plus funds borrowed with an SBA guaranty, to invest in growth companies. Some, like Johns Martin's Capital Across America, invest exclusively in women-owned firms. An SBIC investment is typically smaller (about $1.5 million) than one from a traditional venture capital firm. In fiscal year 2002, SBICs invested almost $800 million in 1,979 companies.

"SBICs sometimes look to the more mundane industries," Johns Martin says. "Venture capitalists tend to invest in the latest, greatest and fastest business concept. At SBICs, we're looking to invest in those 'boring' kinds of businesses that are going to make money."

Capital Across America is unique in that it doesn't require business owners to give up equity. Instead, it offers a type of debt financing called mezzanine financing that loans against the companies projected cash flow. The interest rates are typically higher than a conventional loan, but Johns Martin says it's still less costly than giving up equity.

"We call it 'smart money,' because you're also receiving counseling and advice to help you grow the company," she says. "It's like having a professional business consultant at your fingertips."

While more women-owned firms are working with professional investors, they still lag their male counterparts in their ability to secure venture capital. Back at the height of the venture capital gold rush (the late 1990s and 2000), women entrepreneurs participated in fewer than 5 percent of the deals in which billions of dollars were invested, according to Greene's research. The reason for this disparity is multi-layered, Greene explains. The majority of women-owned firms are in the service and retail industries, sectors that are typically less attractive to venture capital firms. Women entrepreneurs are also less likely to be part of the clubby, old-boys network of big-money investors, and so may fly under the radar of venture capitalists. And, finally, Greene says, many women avoid high-growth businesses for perceived lifestyle reasons.

"Too often women limit the growth and size of their companies because they think running a high-growth business will have a negative impact on their quality of life, family time, etc.," she says. "But in reality, it's just a different kind of process--and one that's not necessarily more time consuming. If you're trying to support yourself as a consultant and you're out there providing the services, selling the services, marketing the services, etc., does that take any less time than managing a high-growth business?"

If your business is the realization of a life's dream, you're short-changing yourself by not considering any and all financing options that might help it succeed, Greene concludes.

Match Your Company with the Most Appropriate Lender

Source: Entrepreneur.com, "How to Raise Money for Your Business"

Checklist

• Open a checking account and credit card in your own name
• Make sure your business plan is polished and up to date
• Lower personal monthly expenses to free up more cash for your business
• Use personal savings or other equity to invest in your new business
• Talk to family and friends about a loan or gift
• Visit your local SBDC, Women's Business Center or SCORE chapter for counseling on what type of financing is most appropriate for your business
• Complete the SBA pre-qualification program
• Apply for a bank loan
• If rejected, find a nearby bank that offers SBA-guaranteed loans
• If rejected again, investigate microloans and other non-traditional financing sources
• Research venture capital firms and SBICs