Money matters: using sound resources, you can find capital for your business.

FASHION DESIGNER KARA SAUN GARNERED NATIONAL praise as runner-up on the first season of Bravo's reality competition series Project Runway. Showing her styles at the 2005 New York Olympus Fashion Week, Saun not only wowed television viewers, she also inspired an angel investor from Connecticut to help launch her Fall 2006 clothing line at Los Angeles Fashion Week.

"He and his wife saw me on Project Runway," says Saun. "He liked my work and personality." Over the course of six to eight months from their initial meeting, a contract was drawn whereby Saun's investor (who provided an amount in the low six figures) would get an equity percentage, but she would retain fun creative and operational control.

[ILLUSTRATION OMITTED]

Having a solid business plan is what helped seal the deal, says the 39-year-old Los Angeles-based designer. "Even though he sought me out, I still needed a strong presentation," says Saun on what investors expect. "I worked with two business writers and my accountant. I had a full budget and marketing plan. They want to see what the profits are going to be and the return on their investment."

Saun's line of gowns and cocktail dresses, starting at $1,500, is sold in boutiques throughout California, New York, Texas, and Connecticut and at www.karasaun.com. She still designs custom clothing for celebrity clientele and does costume design for television shows. Next, Saun wants to secure second-round financing to sell her line in high-end retail stores such as Nordstrom and Saks Fifth Avenue.

A shortfall of capital is one of the most commonly cited reasons businesses fail, says Todd McCrackin, president of the National Small Business Association (NSBA), a small-business advocacy group based in Washington, D.C. These days, it is tougher than ever for entrepreneurs to raise money.

According to the NSBA, small businesses in 2007 were less likely to obtain adequate financing than they were 10 years ago. For America's smallest businesses, credit cards are a primary source of financing, followed by earnings of the business and then private loans. Larger companies rely much more on bank loans. New companies, however, generally don't have access to commercial bank loans because they lack operating experience and solid credit history, says McCrackin. "It doesn't matter if an entrepreneur is asking for $10,000 or $1 million, bankers require the same information."

Capital Resources

* Angel Investors: Typically among the earliest sources of funding for budding entrepreneurs. Such investors are available to finance your business and believe in your vision just as much as you do. They provide seed capital ranging from a few thousand dollars to as much as $1 million. Angel Capital Association, www.angelcapitalassociation.org

* Interpersonal Funding: Private monies from friends and family, a fast and easy source. Terms are usually more lax than with other forms of borrowed capital. Receipts should be drawn up to show the exchange and any stipulations for repayment. Circle Lending, www.circlelending.com

* Loans: The Small Business Administration offers various loan programs. Its Community Express Program grants loans from $5,000 to $50,000 in conjunction with preferred lenders (www.blxonline.com/Products_Community_Express.cfm). Small Business Administration, www.sba.gov

* Microlending: For startups without access to traditional financing. Regional and national nonprofit groups make loans from as little as $500 up to $35,000, and repayment terms are less stringent. Lenders may also offer financial and business workshops. Each organization has its own lending requirements. ACCION USA, www.accionusa.org

* Venture Capitalists: The least likely source of funds for startups, according to NSBA president Todd McCrackin. He says venture capitalists tend to shy away from very new businesses and rarely invest less than $5 million at a time. National Association of Investment Companies, www.naicvc. corn; National Venture Capital Association, www.nvca.org

Where to go for help:

* Association of Small Business Development Centers, www.asbdc-us.org

* National Business Association, www.nationalbusiness.org

* SCORE (Service Corps of Retired Executives), www.score.org

* The Minority Business Development Agency, www.mbda.gov

Books

Raising Capital for Dummies by Joseph W. Bartlett and Peter Economy (For Dummies; $24.99)