Raise Money for Your Craft Business
by James Dillehay
How will you cover the costs of starting or expanding your crafts business? You will need money for show rental fees, travel expenses, additional raw materials to replace what you use, office supplies, photography, and production costs of promotional material like business cards, brochures, and price lists.
You might want a faster computer or advanced equipment that is more effective for executing your design ideas. Increased sales could mean hiring someone to work for you and larger and more frequent material purchases.
Suppose you find it profitable to do more shows and need capital for advance rental fees. The above possibilities include only a few of the situations that require funding in an expanding business.
Friends might be willing to lend you money for your needs. Unless you are ready to risk their alienation if something goes wrong, it might be safer to ask them to co-sign a loan made through the bank. Your friend will still be liable if you fail to repay the loan.
If you are confident the opportunity for realizing greater profit is a good one, explain your plan in depth. Show them a business plan with all the actions you will take to increase sales and income to repay the loan.
If you keep your approach on a business level, they will pick up on your confidence and your chances of getting their help and keeping their friendship improve.
There is probably no easier means of getting cash or make purchases than by using your own credit cards. You can make cash advances at almost all banks for any amount of your available credit on the card. The money is available by your signature alone.
Unfortunately, interest rates on credit cards are higher than almost any other lending source. If you donít repay the loans promptly, interest adds up quickly.
Youíre much more likely to get a credit card if you have a job or have an established source of income. So, if you are working now, get as much established credit as you can before embarking on your business.
Though credit cards are essentially bank loans, you can also apply directly to your bank for cash loans. Again, it is easier to get a loan once you have established credit by paying off previous loans. But even if you have, they will usually ask for collateral on a loan or a co-signer with good credit.
Money lenders who review business loan applications of any kind will want to see a business plan. If you foresee seeking loans for your business, you will need to draft a formal plan .
Financial institutions that make loans want confirmation that there is a demand for your craft products. This could be in the form of sales reports and letters from satisfied customers.
Lenders care more about the marketability of your products than in the productís novelty. They also want to know how the loan can generate enough extra business to pay back the money.
If your bank turns you down, another option is convincing the Small Business Administration (SBA) to back your loan. SBA does not usually make direct loans. It does guarantee from 75% to 90% of a loan, working through your bank.
The SBA will not consider your application until you have been rejected by a bank. As when applying for bank loans, you must convince them your plan will work. Show them your ideas in the form of a business plan and explain how you will carry them out.
Beyond lending money, your local SBA office is a great source for information on starting and running a business. They provide a series of how-to publications covering accounting, financing, pricing, management, and many other topics.
Another help program usually found in the same offices as SBA is run by the Service Corps Of Retired Executives (SCORE). Here you will find retired executives who volunteer their experience in advising small new companies. They offer free and low-cost training in all the basics of running a business.
Small Business Institutes (SBIís) are sponsored through the SBA on over 500 university and college campuses. Management counseling is provided by students at senior or graduate levels in the business administration programs under faculty supervision. Visit a SBA office near you to find out more. Many major cities have a branch listed in the government pages of the phone book. Or call (800) 827-5722 for any information on the above services.
These programs are usually local groups of small businesses who meet regularly to learn about each otherís business and give advice. Members submit loan proposals to a group council which then makes a decision to grant the loan. The funding for the loans comes from government or private sources like the Ford Foundation and the SBA.
Credit unions are more friendly, assuming you are a member, but may not make you a business loan. Lending policies for members are less stringent than that of banks. Credit unions are created to help the member/owners. You can become a member of one usually through association with a specific interest group like a cooperative or as an employee of some field of education. When you seek a loan, say the money is for a vacation. Just donít take one, yet.
option for paying for essential services is
I asked if heíd be interested in swapping my print job for something I could make and he agreed to it. My printing bill would have been $375; instead I spent two days creating his family a queen size, handwoven throw.