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FORTUNE Small Business:

Can I compete with Starbucks?

First study the caffeine behemoth, say FSB's experts, and then do some math.

By Rich Russakoff and Mary Goodman
Bottom Line Consultants, Richmond, Va.

(FSB Online) -- Dear FSB: I want to start a coffee shop. Is this wise, given that there is a Starbucks on every corner? And where do I start? I don't know how to come up with the capital.

- Antoine Holmes, Chicago

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While it is not impossible to get a bank loan for a startup, it is difficult. New businesses are risky and bankers are conservative. When approving loans, lenders look at the four Cs: credit, collateral, commitment and capacity. What is your credit score? Do you have any hard assets, such as real estate, to pledge as collateral? How much money will you contribute? What skills and experience are you bringing to the party? How viable is your project, given industry trends? Finally, can you pay back the loan? If you aren't in good shape to apply for a bank loan, look to the four Fs for financing: friends, family, fools and your own personal funding, such as credit card debt.

You might also be able to win funding from a private investor, known as an angel, who is willing to invest capital to help you get started in exchange for equity. vFinance.com is a site that allows you to search for angel investors. You can narrow your search based on the amount of money you are seeking and the state where you live.

Some counties and states offer programs to help new businesses get financing. The best way to find out about them is to contact your local economic or business development department. Top of page

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