by: Michelle Kennedy

A reader recently asked how she could finance her business idea when she had used up her savings for education, and does not have family or friends to ask for money from.

Well, the truth is, that having no savings or family and friends to turn to can make starting a business as a woman difficult, particularly in this country. According to the SBA, women are starting new firms at twice the rate of all other business and own nearly 40 percent of all firms in the U.S. These 8 million firms employ 18.5 million or one in every five U.S. workers, and contribute $2.3 trillion to the economy. However, the SBA also admits that women continue to face unique challenges when trying to finance those businesses, particularly in the start up stage.

We are going to begin by assuming that you already have a business you want to start, and hopefully a business plan from which to get going. If you need help writing the plan, check out The Women's Business Center Online for a step by step approach.

What you'll need to do first is determine your financial requirements. Assume that there will be a gap between the time you start your business and when you start to produce significant income. Depending on your business, that could be for as long as six months. You should try and have your expenses covered for this phase. Now, remember this is for businesses that require a high amount of overhead, for example a retail store or restaurant. Many women choose to start service or home-based businesses because the start-up costs are considerably lower than other businesses. So a person with little or no cash or credit to start can still build a business if it has low overhead.

In determining your financial needs you will need to add together all of your fixed pay-outs each month (electric, rent, car payment, etc.) and then add your flexible pay-outs (clothing, take-out, entertainment), if after subtracting all of this from your current income you still have enough left over to save for your business then great. More often than not, though, this is not the case. So what can you do? Well, you can start your business part time. Work on your plan nights and weekends. If you have crystal clear credit, prepare yourself to visit the bank for a loan. According to Creativeinvest.com, you will need to: Get all of your research and data together and prepare a solid business plan; Check your credit report; Should you actually see a banker, be professional and polite; Be ready for anything.

Types of credit
Know what you are asking for. If you're going to ask for credit, you need to know what programs are out there.

Commercial Finance
Loans to finance working capital, accounts receivable, purchase orders, or inventory. Typically, these loans must be secured by assets.
Equipment Leasing
Financing for the purchase of a specific piece of business equipment.
Real Estate Finance
Financing for the purchase of Real Estate, or for the construction of business facilities.

SBA Programs: Government Funds
The U.S. Government is a sources of small business capital, mainly through the Small Business Administration (SBA). The SBA was created to help small business. They have developed many programs, but are still, in the main, ineffective in assisting women and minority businesses. Still, you should be aware of the programs they offer. Below are summaries of major SBA loan programs.

LOAN GUARANTY: The loan guaranty program is used by private-sector lenders. These private sector loans are then guaranteed by the SBA.
LOWDOC: same as above, but all loans are under $100,000. The program uses a streamlined and expedited loan application and review process.
CAPLINES: For small businesses needing short-term working-capital. Actually, five separate programs.
POLLUTION CONTROL: For financing "the planning, design, or installation of a pollution control facilities."
MINORITY AND WOMEN PREQUAL: According to SBA, "This program is designed to assist minority and women borrowers in developing viable loan application packages."
MICROLOAN PROGRAM: This program provides small loans from as little as $100 up to $25,000.
CERTIFIED DEVELOPMENT (504 LOAN): Program providing "long term loans for the purchase of land, buildings, machinery, and equipment."

If your credit is not clear, but you still have credit cards, be it known that most small businesses are financed this way. Some credit card companies have excellent revolving credit programs for small businesses. Although I highly discourage the use of credit cards in general, if you feel confident about your business plan and cannot get financed any other way, by all means...

Above all else don't be discouraged. Utilize the Internet to network and find information. There are so many people who have started successful businesses on a shoestring (myself included, although I started on the thingamabobber that's on the end of the shoestring!)...and they are talking and sharing their resources. Be patient and persevere, if you want your business to succeed badly enough it probably will.

Besides my own, here are some helpful sites to visit:

Bizymoms
Excellent resource if you need ideas for starting a home-based business, whether or not you're a mom.

American Express Small Business

Wells Fargo

Small Business Administration home page

Procurement Assistance Jumpstation

National Association of Women Business Owners

Michelle Kennedy is a freelance writer and the Founding Editor of The Money Maven, the first online financial forum just for women.