Finding the money to start small business formation in Illinois

Many challenges exist when starting a new business. One of the most significant challenges is funding small business formation. Some Illinois entrepreneurs may not know where to begin to find the money needed to make their dreams a reality.

Of course, the most obvious source of money for a new business may be the owner or owners. Most businesses start with somewhere between 20 and 30 percent of the capital coming from the owner. In fact, many lenders require that the owner have a significant financial stake in the business before providing additional funding.

Sometimes, in order to satisfy this requirement, family and friends help the prospective owner to meet this financial need. The logistics of how or whether the money is to be paid back can vary widely. Some people consider it a loan, while others accept a stake in the newly formed company.

Many entrepreneurs receive funding through the Small Business Administration, which essentially guarantees a large portion of a loan from a traditional lender. This means that, if the borrower is unable to repay the loan, the lender can turn to the government for anywhere from 50 to 90 percent of the loan balance. This may be a good alternative for people who are unable to secure a loan on their own.

Funding is an essential part of Illinois small business formation, but other concerns exist as well. All of the money in the world will not guarantee the success of a business if not all of the legal and business issues are given proper consideration. Consulting with individuals familiar with what it takes to start a business -- including someone who understands the legal requirements involved -- could give a business the best opportunity at success.

Source: news-leader.com, ""Show me the money!" How to Finance Your Small Business", , July 5, 2014

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