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Raising capital is the most basic of all business activities. While it often can be a complex and challenging process, being well informed and prepared will greatly improve the chances of securing needed funds. A number of things should be considered such as where the money will come from, how much will be needed, how long it will take to achieve profitability, and more.
All possible financing options should be considered, including:
- Personal Funds: The primary source of capital for most new businesses is savings and other personal resources.
- The 3 F’s (Friends, Family & Fools): Many entrepreneurs seek support from friends, family and other personal connections when starting a business venture.
- Financial Institutions: Banks and credit unions may provide a loan if the business plan is sound.
- Angels & Venture Capitalists: These individuals and firms provide funds in exchange for partial ownership.
NOTE: Most professional sources of funds want to know that the entrepreneur is fully committed and that those closest to the entrepreneur are backing the venture before considering an investment or loan.
These links provide information on gaining access to capital from a variety of sources:
Financing Basics (DBED)
Explanation of the basics of debt and equity financing.
Finance Start-Up (SBA)
Discussion of financing basics for start-ups.
Finding Capital (SBA)
Explanation of the basic steps for finding start-up capital.
Equity Financing (MBDA)
Description of equity financing, what makes a company attractive for equity investment and requirements for obtaining equity capital.
Surety Bond (SBA)
A discussion of the surety bond and its role in start-up capital.
Borrowing (SBA)
The role of borrowing as a source of funding.
Applying for a Loan (SBA)
Discussion of the basics of applying for a loan.
Loan Checklist (SBA)
Checklist of requirements for a loan package.
Loan Guarantee Programs (DBED)
Introduction of state and federal loan guarantee programs, including:
Direct Loan Programs (DBED)
Introduction of state and federal direct loan programs, including the:
Equity Investment (DBED)
Explanation of Maryland equity investment programs, including the:
Maryland Technology Development Corporation (TEDCO)
TEDCO brings innovations from universities and federal labs into the State's economy by facilitating the transfer of technology to the private sector and by providing emerging technology companies and university researchers with vital seed funding and specialized technical assistance.
Maryland Industrial Partnerships (MIPS)
The MIPS program accelerates the commercialization of technology in Maryland by jointly funding collaborative R&D projects between companies and University System of Maryland faculty.
SBIR & STTR Programs (SBA)
The SBA Office of Technology administers the Small Business Innovation Research (SBIR) Program and the Small Business Technology Transfer (STTR) Program. Through these two competitive set-aside programs small, high-tech, innovative companies can receive a significant part of the federal government's R&D funding. Eleven federal departments participate in the SBIR program and five departments participate in the STTR program awarding $2 billion to small high-tech businesses. The US National Science Foundation administers the www.SBIR.gov site on behalf of the federal government.
Defense Advanced Research Projects Agency (DARPA)
DARPA is the R&D office for the US Department of Defense. All of DARPA's research is performed by outside researchers at businesses (some opportunities reserved for small businesses), universities, non-profit institutions, government laboratories, and other research organizations.
Agriculture Loan Programs (DBED)
Highlight of state and federal agriculture loan programs, including:
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