Problem Of Funds To Start A Small Business

by hasmat - Date: 2010-09-13 - Word Count: 407 Share This!

If you are determined to do some business on your own rather than doing office work in other people's office then the first problem that you may face is the start up funding. The numbers of people with innovative business ideas are a lot, but only few of them can succeed. This is not only because their ideas are non effective, but mostly because they lack of the investment or the start up fund. And start up business loans are very tough to get when you are thinking to be established with your small business ideas. In addition other ways by which you can raise your fund to start your small business ideas are also limited. Therefore for a young entrepreneur, start up funding is the number one challenge to be faced before he is going to start his business.

For young entrepreneurs calculating the amount he should need is the most important before looking for a funding. And the normal idea of calculating is that, the amount will be equal to the sum of total expense and the expected revenue of the first year. No matter how small a business is, the amount is still high enough for a person to invest. Therefore the next step which is the most difficult job is to find the start up capital. At a glance, the common sources for the funding of the small businesses are- self financing, equity loan, loans from family members and friends, grants, partnerships, SME finance and Bank loans. Among them only the lucky persons may find the start up fund from the sources other than Banks and SME finance. But for most of them start up business loans from the Banks are the only hope.

Bank loans may be the only hope for most of the young entrepreneurs but the in reality it is not easy as it looks. It is because although the small businesses account half of the GDP, but getting a start up business loans is like winning the lottery in Las Vegas. The conditions and the bank authority put so many obstacles in order to make sure that they can get the loan back in time. But, the problem is according to their judgment a lot of young entrepreneurs become out listed of getting the loan. Therefore the banks and the government should think about it because without the financial support the small businesses can not contribute effectively to the national economy.

Related Tags: small business loan, young entrepreneur, start-up loan

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