How to get capital for your first business

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(FORTUNE Small Business) -- Dear FSB: I am a green card holder and have tackled the retail and restaurant business in India. I have experience with management of parties and events, including conferences. At present I am living in Madison with my son, but I want to create an independent business and take advantage of my 34 years of experience in this business. What finances are available to help me?

- Kailash Chand Sethi, Madison, Ala.

Dear Kailash: According to Philip Levin, a San Francisco immigration lawyer who specializes in small businesses: "Anyone with a green card is treated like a citizen as far as their ability to open, develop and direct a business."

Green card holders are eligible for the same kinds of bank and credit loans as U.S. citizens, although Levin noted that different lenders have different criteria and are within their legal bounds to require borrowers to be U.S. citizens. However, he said he's never heard of any actually doing so.

All things being equal, getting a loan for a small business is difficult for any first-time business owner unless he or she has valuable collateral to borrow against, said Doug Williams, president of small-business consulting firm Doug Williams and Associates.

"If somebody has a house they can take a loan against, like a second mortgage, it's possible," he said. "But banks do not loan against a brand new business. They won't take that risk."

Williams said the best place for any first-time business owner to get funding is to ask friends and family for it. Going this route is easier in many ways than going with some kind of loan agency, because you already have trust relationships established with these people and they are more likely to help fund your venture if they believe in your idea, he said.

If you do have collateral against which you can borrow money, one thing you have to be sure of as a legal resident born outside of the U.S. is that you have established credit with banks and credit-card agencies in this country, said Aibhinn Wilson-O'Keefe, a native of Dublin, Ireland, who co-owns and is the general manager of Provence, a restaurant in New York. She said that banks and credit-card agencies in the U.S. did not recognize the credit she'd established in Ireland when she started her restaurant with partners.

Wilson-O'Keefe also recommended friends and family as the best investors for first-time business owners; in fact, it is the primary way she and her Provence co-owners secured funding.

Of course, before asking anyone for money, a first-time business owner must have a sound business plan - not to mention courage - since you're probably going to have to approach different people and try to sell your idea, Wilson-O'Keefe said.

If you need guidance coming up with a business plan, one of Williams' websites has free online tools and other resources to help get started.

If neither friends and family nor securing a bank or credit loan are options, there is public funding available to first-time business owners through microloans given by economic development agencies, Williams said. They are usually tied to state governments, so local government agencies should have information about how to apply for these loans.

Another good resource for finding microloans is the U.S. Small Business Administration, which offers a host of resources for small businesses. Information about how to apply and secure these loans is also available on the agency's website.