Money is out there for small businesses

Entrepreneurs tend to be dedicated and passionate visionaries and long-range thinkers. These are character traits that are excellent for developing the ideas that create great businesses.

However, entrepreneurs often find it difficult to put together the nuts and bolts needed to actually start a viable, profitable and sustainable business. Luckily, there are resources to help.

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One of the major obstacles entrepreneurs face is accessing startup capital. For the burgeoning group of diverse entrepreneurs in the greater Madison area, understanding the financing of a new venture is crucial. Finding money to start a business that has not yet proven profitable can be challenging, particularly if the idea is somewhat revolutionary.

Unfortunately, many small startup companies unable to find money will use a credit card to finance operations. This pitfall should be avoided, as this form of  "loan" has excessively high interest rates and can rapidly destroy a good credit score.

Reliable funding methods include micro-loans, small business grants and venture capital.

Micro-loans are often the first method of funding that small entrepreneurial businesses consider. Many of these loans are administered through banks. However, establishing the credibility of a small entrepreneurial business can be challenging.

Understanding the three C's (cash, collateral and credit or capacity) of the loan review process is particularly important when applying for a small entrepreneurial business loan.

The cash requirement means that the entrepreneur is willing to put his or her own cash on the line for their project.

Collateral means that the loan officer is interested in knowing whether the loan recipient is able to repay the loan if the business does not succeed. Collateral is determined by the loan officer and can be something as small as a necklace or as large as your home.

Finally, credit or capacity means that the entrepreneur, in this case the borrower, has the capacity to make payments on the loan.

The second way to finance a small business is through grants. Applying for small and entrepreneurial business startup grants requires research and time, but "free money" is always the best money.

One resource for grants on the federal level is www.fedgrants.gov. This page provides a listing of all grants available through the federal government. Additional grants for services, rather than money, can be found on the Small Business Administration's Web site, www.sba.gov. Also, different localities tend to have individualized granting sources, but they vary greatly depending on state and local budgets.

The final form of funding is venture capital. Venture capitalists can be hard to find, but if they were easy to find, everyone would be asking them for money. Venture capitalists in Wisconsin have supported the creation of the Wisconsin Angel Network (WAN) (www.wisconsinangelnetwork.com). The network allows all entrepreneurs to register and submit an executive summary of their business plan for review by Wisconsin venture capitalists.

Ultimately, resources for small entrepreneurial startups abound. It simply takes time, energy, commitment and tenacity to locate them, apply for them and receive them. Given the disposition to find the resources, entrepreneurs will find themselves realizing their visions. Once the nuts and bolts are dealt with, the entrepreneur's business can flourish.