There are many small business funding strategies you can take advantage of to ensure you have the best chance of succeeding in the future.
Tapping Personal Funds
In the very early startup stages, it’s often wise to open up your wallet and put some of your personal finances toward your business startup venture. This funding method offers you the most control.
You could also ask for a friendly loan from family members and friends – and, of course, agree to pay them back any startup funding they give you to help you get your formal endeavor off the ground.
Small Business Financing Using Equity
Equity funding for a new business takes place when a business owner acquires a predetermined amount of capital in exchange for an equity ownership stake within the company. Angel investors, institutional investors, and venture capitalists are those primarily involved in equity funding for new businesses.
For your business to qualify for equity funding, you must have a viable business plan on paper, along with good credit. A viable business plan projects substantial profits and a high return on investment (ROI). Get help from a professional business plan writer to convey the most attractive business plan possible.
Taking a Small Business Loan
Small business lending and debt financing options run the gamut. Bank loans for small business are a traditional method of obtaining capital that can be paid off over time. Microloans are an excellent option for small business owners as they are typically short-term loans that range from less than $1,000 to over $100,000, based on how much capital you need in the near future.
In addition to using banks or online lending sites, the federal Small Business Administration offers options for government small business loans to qualifying business ventures.
The key to acquiring a loan is to show solid projections on your profits. Loan applications that indicate low equity, high debt, or unsubstantiated profit projections are far more likely to be rejected by a lender.
Getting a Small Business Grant
Another funding option to explore revolves around grants for small business owners. There are lots of grant options, from grants to help medical research startups, to grants for 501(c)3 non-profits, a grant can be a tremendous financial boon. There are also small business grants for women who pursue entrepreneurship.
When seeking a grant, it’s important to consider all private organizations and public, government-run agencies. Keep in mind that the government only provides funding for viable business plans that are truly worthy of financing. Consider hiring an experienced grant writer to craft a proposal for your grant application. If your proposal is worded succinctly and is convincing enough, you may have some business funding coming your way.
Raise Capital With Crowdfunding
Crowdfunding is a modern capital-raising strategy for an entrepreneur starting a business. Entrepreneurs typically use the Internet to solicit for business funding through sites like GoFundMe, Kickstarter, and Indiegogo.
Potential business investors can then browse these ideas and choose which ones to support financially. By setting up a crowdfunding campaign, an entrepreneur can raise anything from a few hundred dollars upward.
The main benefit of crowdfunding is that it has such a wide reach, meaning you can quickly connect with a large pool of investors than you can with most other business funding strategies. Crowdfunding can also provide other benefits, such as exposure, awareness, and testing public interest in an idea.
There are lots of ways to get funding for your business, but they all require a solid business plan with accurate financial information. Without a good business plan, it will be difficult to convince anyone to invest in your business.