5 Ways To Fund Your Small Business

It can take a lot of money to get a business off the ground. Plenty of people scrape together money for years so they can start their dream business and they gather money from many different sources. Even after the business gets up and running, you’ll probably need to source more funding for things like equipment purchases or premises expansion.

Fortunately, there are plenty of sources for small business funding available to today’s entrepreneurs. Small business loans are available from both traditional and non-traditional lenders. You can use crowdsourcing platforms to get money donated from fans of your products. You can also put in your own savings and ask your friends and family to put in theirs, or you can try to attract real investors to grow your business into a large corporation. And if you’re having trouble getting a small business loan, you might try getting a small business line of credit or credit card instead.

1) Small Business Loans

Small business loans are a popular way to fund startup costs, expansions, day-to-day operating expenses, and so on. You can either get a traditional small business loan from a bank, or you can go with one of the many non-traditional small business loans offered by online lenders.

To get a traditional small business loan, you’ll have to apply to a bank and wait a few weeks for your application to be processed. The lending requirements will be more stringent – you’ll need to provide proof of healthy business revenue, a personal credit score of at least 650, a business credit score of at least 160, and detailed financial information about your business. It will take a while to get your loan approved, but you’ll pay a lower interest rate if you go with a traditional lender

However, if you need funds in a hurry to pay daily operating expenses and payroll, you may want to go with a non-traditional online lender. Online lenders have less strict lending requirements and tend to approve more business loans than traditional lenders. You can also get your money in a matter of days. Sometimes you can even get your online small business loan the same day you apply.

2) Crowdfunding

Crowdfunding uses the internet to solicit funds from an entire audience interested in your business offerings. You can use a website like Kickstarter or Indiegogo to solicit donations from people who want to see your products made, and reward donations with free merchandise, event tickets, and other tokens. Of course, crowdfunding works best if you have some brand awareness out in the world already. However, there are also crowdfunding platforms to attract equity investors or debt investors, like Wefunder or Mainvest.

3) Savings

Bootstrapping is the practice of starting up a company with only the money you can scrape together yourself, borrow from friends and family, or earn from your first sales. It’s a difficult and hardscrabble way to start a business, but it’s one that allows you to start your company without taking on debt before you’re sure your business will be profitable. If you’re using money borrowed from family and friends to help start your business, make sure you have a frank discussion with them first about the risks inherent in investing in your business. Put your lending agreement on paper so everyone knows where they stand.

4) Investors

Typically, investors don’t want to invest in small businesses, because the return they can expect is limited. However, if you want to grow your business into a large and lucrative company, attracting equity investment or angel investment could give you the cash infusion you need to take your startup to that level. Angel investors are more likely to focus on smaller firms. Equity investors will want a share of ownership in your company and venture capitalists are looking to invest in promising startups that have the potential to grow quickly into large corporations.

5) Business Lines of Credit

If you’re trying to fund your startup costs, you might find it hard to get a business loan either from a traditional lender or from an online lender. You haven’t yet built any business assets that you can use as collateral. For many aspiring entrepreneurs, a business line of credit or a business card provides enough cash to fund startup costs, and you only have to borrow as much as you need.

Funding a small business isn’t always easy, but you have options, especially in this day and age. Make sure your business gets the money it needs, so you can continue to live your dream life.