All entrepreneurs have to overcome hurdles when it comes to finding capital for their new business. When customers are few, earnings are scarce and business assets are immaterial, it takes energy and creativity to locate the necessary funds. And these challenges are heightened for entrepreneurs in their 20s, who are often involved with their first formal business venture or just out of school with limited work experience.

In previous articles, I have listed a few avenues of funding to start up your business including, bank loans, friends and relatives, and business angels. Much of this advice applies equally well to young entrepreneurs; however, there are typically a few extra hurdles that make these sources of financing more difficult to attain for the younger generation of business owners. Some of this difficulty is simply perception, but some of it is a reality. When it comes to bank loans, you're required to have a good credit history, submit a personal financial statement, and sometimes make an equity investment in your business--all of which may not be easy for most young entrepreneurs to accomplish. For example, a few blemishes on your credit report from late payments in college could hurt your loan application. And since most twenty-somethings don't own a home or have much equity built up, relying on home equity lines of credit  is also not an option.

Financing from relatives and friends is also a bit difficult to obtain for twenty-somethings rather than thirty- or forty-somethings with more extensive networks. In some instances, young entrepreneurs "family and friends" circle consists of their parents and a handful of close friends--all of whom are either too poor or too uninterested in funding your business venture.

This being the case, it’s time to open your mind and expand your circles. Think about all the different people you know, including friends of friends, who could help fund your business. Many of the country's most well known businesses were funded after the entrepreneur expanded their financing circle beyond their parents. The founder of Atlantic Records, for instance, landed a loan from his family dentist!

As explained in previous articles, "business angels", are more likely to invest large sums of money with an experienced business owner than with a young entrepreneur. However, there are some business angels who prefer to spread their wealth in smaller investment amounts to young entrepreneurs with promising ideas. So raising a smaller amount from business angels is a very achievable goal for most twenty-somethings with a good business concept and solid business plan.

Martin Huckle