Whether you’re just starting out or are working to build up your existing small business, there’s one thing that you’re going to need to reach your goals, and that’s money. The good news is there are quite a few different options when it comes to funding a business. Here are a few that can help you turn your awesome business idea into a profitable reality.
Ok, you may be thinking, “What? I don’t have that kind of money.” But hear us out for a second. Even if you don’t have a nest egg tucked away, there are other resources you can turn to that can generate the capital you need to finance your company. For instance, you might consider refinancing your home or selling something valuable that you own. This is important, especially since lenders and investors typically expect business owners to make their own financial commitment before they dish out cash.
Friends and Family
There may be several people who are close to you that would be willing to give you a loan to fund your startup. Some may even gift you the money just to help you get your fledgling business off the ground. Others might decide they want to become investors. In any case, seeking funding from people you know personally can be a viable option.
Business Loan from a Lender
Thanks to positive trending in the small business success arena, it’s easier than ever to get business loans from traditional lending institutions, like banks and credit unions. Keep in mind, however, that applying for a business loan takes time and preparation. You will most likely be required to present your business plan to key decision makers who will assess the risk, determine if you’re eligible and for how much.
Business Loan from an Organization
In addition to banks, many small business owners have found success seeking capital from other, less traditional means, such as business-related or government sponsored organizations. There are a number of organizations that are in place with the sole purpose of promoting economic development and helping small businesses thrive. If you are a woman or a minority, there may be additional options available to you as well. Do some research to find out if there are any programs, either local or national, that might be a good fit for your needs.
Venture capitalists, angel investors and private lenders may all be great funding sources for your business. With the right business plan and a willingness to do some legwork, you should be able to get your idea in front of the right people who might be willing to back it financially. Again, be sure to do your research and prepare well enough to present your business plan and convince prospective investors to get on board.
Line of Credit
Regardless of how careful and precise you have been in your business planning, there will inevitably be unexpected expenses that pop up, or costs that go beyond what you initially budgeted for. Having a business line of credit will provide access to funds as needed. Just remember, the sooner you secure this type of funding, the better (preferably before you launch your business). Make sure your credit is in good shape and stick with a bank or lender that you are familiar with.
Another viable source of funding for your small business is government grants. These are particularly attractive since the money does not need to be paid back. Of course, because of this, grants can be a bit more challenging to get than loans or other funding options. Still, it may be worth applying. There are a variety of different types of grants to choose from. The SBIR program website is a great place to start.
Like most small business owners, chances are you’ll need more than one funding solution in order to get all the money you’ll need to develop your business. You may wish to explore a few or even all of the resources listed above. And, of course, if you need help with any of your business planning needs, don’t be shy. We’re here to help get you to the next level – whatever that level may be.