Capital Gains The truth about startup financing: Know your options and do your homework to get the funding you need for your business.

The difference between a startup that succeeds and one thatfails largely comes down to money. No matter how great the idea orhow high the customer demand, new businesses stumble when theydon't get enough financial support.

Financing may be your greatest source of stress as you startyour business, but the chase for dollars isn't always theordeal some entrepreneurs expect. The simplicity of the processmight even surprise you. Kym A. Nelson, 37, applied for a businessloan from National City Corp. over the phone. "It waseasy," says Nelson, who started The Furry Beastro, a dogbakery, grooming and pet-accessories shop in Chicago, in 2003.

Nelson was lucky. Her management experience at MTV Networks,stellar credit score and debt-free lifestyle helped win over thelending officer, but most new businesses can't match that levelof creditworthiness. Professional investors, such as VCs andangels, are also mostly out of reach. Many entrepreneurs relyinstead on family and friends, personal savings, and credit cardswith hefty credit lines as their greatest sources of early funding.Between the two ends of the spectrum lie less conventionalpossibilities, including economic development corporations,business-plan contests, and public and private microlenders.