By Donna Mitchell, Next Avenue
Before Dawn Kelly, 58, presented her fast food restaurant The Nourish Spot in Queens, New York, in 2017, she had been fired from a corporate meddling position. I needed to find a way to keep running, but I wasn’t sure about almost everyone. and every facet of starting and operating a business.
However, one of Kelly’s plans was sound. She would depend on her non-public savings and the product of compensation to finance the business.
Older marketing specialists have smart credits, which is useful for applying for a business credit card or bank financing.
“I didn’t even go to a bank to apply for a loan,” said Kelly, who co-owns the business with her children. “I already knew that African-Americans had a lot of difficulty getting bank loans from companies. “
If you’re like Kelly and planning to start a business at age 40, the concept of financing it with bank loans, investors, or donations or loans from the circle of family and friends can be a remote moment after your savings. .
When they started, nearly a portion of start-up managers had $10,000 in the bank to fund it, according to a 2019 SCORE study, “The Main Street Megaphone. “A quarter of respondents had reserved $50,000,and by the fall of 2020 According to the Main Street Megaphone report, 75% of small business homeowners surveyed said they used a non-public budget to keep their businesses open to the pandemic.
At some point, however, many marketing specialists are looking for outdoor funding. Just know that there are two great benefits for existing and potential small business homeowners who are well prepared and who are 50 years of age or older over other age groups.
“The first is very specific social capital,” said Gerri Detweiler, director of education at Nav, who is helping commercial homeowners manage credits and simplify finance. “Many of them have a vast network of business relationships, and more than fifty marketing specialists are moving in the direction of what they’ve done in their past full-time career.
In addition, older marketing specialists have smart credits, which is useful when applying for a commercial credit card or for bank or co-op financing, Detweiler said.
Crowdfunding has a difficult option for marketing specialists seeking funding, and platforms have added artistic inventions to help business owners.
This year, GoFundMe. org, the advocacy and charitable arm of crowdfunding platform Go Fund Me, introduced the Small Business Aid Initiative to small businesses affected by the Covid-19 pandemic and awards $500 in counterparty grants to corporations raising at least $500 on the crowdsourcing platform.
Another platform, NextSeed, has added crowdfunding-style investment through so-called regulated crowdfunding. Sponsors who make contributions are, in fact, investors and have a variety of characteristics for making investment money.
“This style of small personal corporations that NextSeed has approved to factor values for our network of investors and the network as a whole, just as a public company would,” said Abe Chu, co-founder of NextSeed.
NextSeed filters the crusade before the board, requiring a business plan and monetary statement. For corporations operating from a physical location, NextSeed may also require a letter of intent for a lease, Chu said. People over the age of 50 own about 20. % of the corporations indexed in NextSeed, Chu estimates.
“Regulatory crowdfunding also gives investors the opportunity to do their own due diligence,” Chu said. “The business plan, team delight and monetary knowledge are presented in the crusade and in the disclosure statement, and investors can post questions and comments for entrepreneurs. “
Historically, 3% of companies applying for NextSeed are approved and finish launching on the platform.
Do not use reliable financing for small businesses, such as credit cards. You can apply for a business credit card from a bank or credit union.
Detweiler suggests obtaining a credit card solely for use and for creating advertising credits.
Sometimes figuring out what business expenses justify a credit card can be tricky, Detweiler said, so she highly recommends turning to mentors for advice. These are wonderful soundboards that can help you make costly mistakes, Detweiler added.
But a caveat: “Small business credit card issuers reserve the right to increase fees if you only have one day behind payments,” Detweiler said. “You must be very careful. ” Commercial credit card interest rates range from 13% to 19% today.
“It is comforting for a banker to know that the borrower is mature, at least in age. “
If you apply for bank financing, it will help you stay in business for at least 3 to five years.
Strengthen your potential lender’s trust in your business and loan application by adding a business plan, says G. Winston Smith, president and chief operating officer of Business Consortium Fund, a New York-based lender.
“It’s comforting for a banker to know that the potential borrower is mature, at least in age,” Smith said. “I hope he’ll also be mature in Array and this will be reflected in the discussion. “
Smith also recommends updating your business plan, with projections of potential financial needs, and then leaving a copy with your advertising banker.
Another source of money: subsidies to small businesses. Nav, for example, grants a subsidy of $10,000 per quarter.
Detweiler warns, however, that looking for loose money to start a business is unrealistic. Subsidies are occasionally competitive, require many programs, and take time. But if it’s decided, Detweiler recommends asking your local small business, business resource center. incubators or accelerators, or an organization of mentors such as SCORE.
“What each and every entrepreneur finds out in the end is that they just don’t know what they don’t know,” Detweiler said. “It’s important to find other people who can help you identify the things you want before you start. “
(This article is part of America’s Entrepreneurs, a Next Avenue initiative that became imaginable through richard M. Schulze Family Foundation and EIX, the Entrepreneur and Innovation Exchange).
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