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One of the major obstacles to starting a business often times is the inability to get a loan. Other people choose to avoid going into debt on a venture, since all businesses have the risk of failing. You don't want to find that the great idea you thought you had, really wasn't able to get off the ground and now your stuck having to pay off a loan without the cash flow to do it.

Fortunately, there are alternatives to getting a loan to start that business. Here are just a few:

Grant money - This is free money which never needs to be paid back. There are multitudes of grants available, and your business idea just may as well qualify for one or more.

Be cautious though. There are a lot of scam companies that will promise you government money by writing your grant proposals. Be sure to check out which ones are legitimate and which ones are not. Contact the Small Business Administration (www.sba.gov) and speak to them about the proper way to go about applying for a grant.

Equity Partners/Investors - You will probably find that other people will have an interest in your idea if it's a good one. If you need money, but do not want to borrow it, you can sell a portion of your company in the form of shares of stock. You will have to form a corporation or LLC to do so. Be careful how you structure the ownership equity of your company, so you don't lose control.

Bootstrap - "Bootstrapping" is a term used to describe the starting of a business with virtually no money. These businesses "pick themselves up by their bootstraps" and get moving. This can be very difficult, but if done right you can build a thriving business with little or no risk. Service businesses that require no purchase of equipment are the easiest to start. For example, you may start a house-cleaning service using your own vacuum cleaner and the supplies under your kitchen sink and in your garage. Perhaps a concierge or dry-cleaning delivery service using your family car. These types of businesses rely heavily on Word-of-Mouth advertising to get started, so make sure you reward your clients who offer referrals.

With a bit of creativity and a lot of thought, there is no reason that you can avoid the risk of taking out a loan to start that business you've been dreaming about. Talk with other business owners and seek out others who didn't use loans to start their businesses. Ask them questions and see what they have to teach you. I would also recommend speaking to a business adviser from www.score.org, whose services are offered free of charge.

Learn more about this author, Larry Smart.
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