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How can I get financing for a small business start-up?

April 25, 2012: 5:05 AM ET

I want to establish my own design/production company that utilizes the benefits of 3-D printing technology. My main hurdle right now is financing. My home was recently foreclosed on, so my credit is not great. I want some ideas on finding potential sources of financing. Since this company will be creating jobs in manufacturing, are there grants or loans I can utilize?
—Aaroon Sadat, San Ramon, Calif.

You may have a great idea, but without a comprehensive business plan and some money of your own to get started, getting a loan or grant will be tough. Grants for single-person start-ups are hard to find, much less obtain. Getting a loan with a weak credit score will make things that much tougher.

That doesn't mean you should give up. But you may need to adjust your expectations of when you can get outside financing and start hiring employees. Start by focusing on refining your business plan and improving your finances. For help with your business plan, tap the expertise of a small business mentor from SCORE, a non-profit group of 13,000 volunteers. You should also visit your local Small Business Administration office to find out what additional resources may be available, including grants.

Saving money by taking a job in your targeted industry will make it easier to get funding down the road. "We want you to have skin in the game and we want to see relevant job experience," says Tom Burke, senior vice president of SBA lending at Wells Fargo. Work on boosting your credit score, too. At a minimum, your so-called FICO score likely needs to be roughly 660 or higher to get a conversation started with a bank, says Charles Green, author of Get Financing Now. And it needs to be significantly higher than that to get the best rates. Reducing credit-card debt can give your score a boost.

Ultimately, scrappy entrepreneurs have many channels to explore funding. Many banks and credit unions issue their own small-business loans in addition to SBA-backed ones. You could also consider peer-to-peer loans via online marketplaces like, or even friends and family. Or find a wealthy partner who shares your vision.

-- Stephanie AuWerter

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