Most modern college students don’t think about careers until after they graduate, despite the fact that many successful businesses started in college dorms. Companies such as Google, Facebook and even Time Magazine are all businesses built by students still in college, and more are on the way. For example, GoCrossCampus is a multiplayer online game developed by students at Yale, and was one of the first “social gaming” apps. Inc.com claims notes that GoCrossCampus is played by more than 40,000 students around the world. While starting a business in college can be a fantastic start to a lifelong career, where can a college student find funding for what might be the next FedEx or Reddit?
Small Businesses Administration
The SBA, or Small Business Administration, can help startups and entrepreneurs by providing finacial aid. The SBA offers low, fixed-rate loans that can be used to fund a wide selection of businesses and are very flexible. Borrowers must apply for loans through lending bodies that are insured by the Small Business Administration, and these loans can be used to purchase stock, real estate or necessary equipment to run a small business. For starting and expanding businesses, the is an excellent source of information regarding both Basic 7(a) Loans and Microloans. While both 7(a) and Microloans are well-suited for a small college business, student entrepreneurs should avoid CDC 504 Loans, which are primarily used to finance large purchases for businesses, such as real estate and construction.
Financing for small businesses is available through many commercial financial institutions. Small businesses and entrepreneurs can apply with either local lenders or national lenders. Commercial lenders calculate interest rates on loans based on credit score of borrowers. Zillow reports that a credit score of 850 is the best you can have, whereas a credit score of 619 or lower is considered very poor. Students seeking a commercial loan should create a business plan to present to the lender, outlining details of the business’ success and addressing questions of profit margins. By being organized, one can address the questions lenders have about the likelihood of a return on their loan.
For a struggling college student, self-financing might not seem like an option, but there are many reasons to consider it. If you are employed, saving a percentage of your earning specifically to invest in your business shows you have faith in your business, which can bring hesitant lenders to your side. For college students who are the recipient of annuities or settlements, a reliable way to generate vast capital quickly is to sell off annuities for a lump sum. Settlement purchaser http://www.annuity.org reports that one of the biggest advantages to selling deferred annuities for immediate annuities is that the risk is transferred to an insurance company. Students often have more immediate resources available to them than they are aware of. By investing these resources in the early stages of a businesses development, you will find it easier to find capital from lenders and investors later.
Many governments, including the U.S. government, offer startups and small businesses government-funded grants in lieu of loans. Each grant has unique requirements, and as grants are funded by taxes, most requirements are quite stringent. The largest advantage to filing for grants is that they do not have to be re-paid, though many grants require that the grant recipient invest an amount of capital equal to the grant received. The website Grants.gov includes lists of grants available, as well as a grant tracking form that allows you to apply for grants and manage grant application statuses. For those looking to change the world with their college startup, grants are an extremely viable option.
Jon @ MoneySmartGuides says
I started a small business in college. To fund the start-up, I used some of my own money and then sourced the rest from family and friends. I wrote up a promissory note that explained the terms of the loan and how I would repay them. I even made reference to how I would repay them (with interest) should the business fail. I didn’t want the money to ruin our relationships.