Small Business News: Small Biz Funding Fundamentals

Will raising capital for your small business be easier in 2011 than it was in 2010? Well, some sources say that funding may be loosening up but be assured that challenges remain. We’ll review what’s happening on the funding front than move on to some tips to help you finance your small business venture in the New Year.

In the News

Don’t worry, be happy. On the surface this article in the Wall Street Journal entitled “Banks Open Loan Spigot” may fill many with optimism about the return of easier financing. We’re enthusiastic about the future of small business here in the U.S. as well but some in the blogosphere have cautioned that this “Uptick in Lending” may not be all it’s cracked up to be. WSJ

Challenges remain. In fact, this followup article demonstrates how even as businesses see some loosening in the credit market a new environment with customers conditioned to expecting more discounts and lower prices may make it difficult to return to business as usual. But this may actually be great news for some small businesses seeking new opportunities for growth in markets traditionally dominated by higher cost competitors. WSJ


The best thing government can do for small business. Whether in Washington D.C. or in a local provincial government like New Brunswick, Canada, controlling deficit and minimizing public debt is the best medicine for small business recovery. It’s disappointing to see public officials dismissing concerns about debt as simply “negative talk” but, of course, it’s nothing new. The Daily Gleaner

Could small business change the banking industry. Check out this article on large banks struggling for survival while new startup banks taking advantage of government funding directed at small business lending are on the rise. Could demand for funding in the small business market reshape the banking industry as a whole as incentives are created to serve this niche? Philadelphia Business Journal

New federal program aims at loans to underserved. A new pilot program will focus on loans to small businesses that have traditionally had difficulty obtaining financing. The new program to be tested in Prince George’s County, Maryland, will guarantee 85 percent of loans up to $250,000 and is backed the U.S. Small Business Administration.

The Basics

Funding small business means building a capital base. One way to approach financing of your small business is to consider obtaining capital from a variety of sources. Possible investors for your new venture or existing small business may run the gamut so be sure you consider all the options at your disposal when considering who to approach for financial backing. BusinessBlogs

Exploding those small business financing myths. If you think most financing from an outside investor or a loan fro a bank is the best or only way to fund your small business, well, you’d be wrong…though certainly taking a loan is more likely than attracting those angel investors or venture capitalists you read about. In this post, Professor of Entrepreneurial Studies Scott Shane sheds light on where most small business financing really comes from. Small Business Trends

Fundraising Strategy

What’s your fundraising plan? Just like your small business idea, your approach to fundraising requires a plan, and it starts with asking a number of very clear questions about your business, your market prospects and your team. Just as your business will need to compete in the market for the attention of busy consumers, your business must compete among a huge number of other entrepreneurs all seeking funding as well. What’s your plan for winning out in the end? Small Business Finance Forum

Raising capital: a how-to guide. Even though finding the money for your next small business startup has always been challenging, there’s no need to throw up your hands or throw in the towel. The fact is that small business are still starting and that entrepreneurs are still finding the funding to fuel these startups. But raising money requires evaluating your options and adapting to the environment. Even with venture capital less approachable than perhaps they once were, there are options open. This article looks at a few.

Closing Thoughts

Other ways to invest. Fred Wilson, principal behind Union Square Ventures, a VC firm responsible for financing Twitter and other high profile tech startups argues loans aren’t the only way to encourage a culture of entrepreneurship. In this post, Fred gives recommendations to the city of New York, where he works, about what is needed to encourage startups there. A VC

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