In today’s economy, creativity and out-of-the-box thinking are a must when it comes to financing a business. Those that manage to get off the ground tend to piece together funding from several different sources, none of which are necessarily easier to obtain. It depends on the type of business and how you can sell yourself to lenders.
Whether your next step is to rent an office space, purchase stock or hire staff, you’ll need a sufficient amount of capital that you can comfortably and reliably pay back. To help you choose the right financial partner for your method, here are the best ways to currently fund your business.
Many entrepreneurs find themselves in a position where they have to self-fund their business before more formal options become viable. This can be done in many ways, including using credit cards, leveraging personal assets, taking out a second mortgage or digging into your savings.
If you truly believe in your venture, you should feel comfortable with investing your own money. It can help you make a start and show potential investors that your business is worth their while.
There are a handful of reliable crowdfunding websites that have become popular among aspiring business owners. These include Kickstarter, Indiegogo, Fundable and a range of other sites that are more focused on a specific niche. Different platforms have different advantages.
For instance, RocketHub allows you to keep the funds you raised, even if your goal isn’t met. Fundly is better for non-profits, while Indiegogo has started offering the ability to run campaigns without end dates. Your success will largely depend on how you market your idea, so be sure to have this in line if you plan to take this route.
Small Business Loans
Seeking capital from banks can be an arduous process, which is why a growing number of business owners opt for online loans instead. There are some benefits here, such as not having to give away a piece of your business to obtain the funding. You also stand a higher chance of being approved, even if you don’t meet the typical requirements.
If you haven’t been in business for long enough, you may not have a business credit rating. In this case, lenders will focus on your personal credit score. Even so, applying for small business loans with bad credit is possible with the right provider.
Small Business Administration
The Small Business Administration (SBA) offers numerous loan types to help entrepreneurs get on their feet. If your business is in the non-profit or educational sector, you may want to consider a small business grant.
Many of today’s most successful companies, including Yahoo and Google, were established on capital provided by angel investors. A potential drawback is that you’ll likely have to give up a part of your business in exchange for the funding. To succeed with this option, you’ll need a solid pitch with tangible proof that your business is worth investing in.
Take the time to explore your options and refine your pitch. Chances are there’s at least one funding source that’s suitable for your business.