If you are trying to start a new business, you know it can be frustrating at times. There are so many things that must be done, items that must be purchased, arrangements that must be made, documents to sign, and so much more. This is a very taxing time for anyone building a new business. It takes an enormous amount of time and energy, not to mention the financial strain during this initial stage of development. Anyone who has or is currently dealing with this knows that one of the biggest strains is making sure you have solid financing to build your dream from start to finish.
There are quite a few possible ways to secure financing, but not all choices will be right for every business and every situation. Here, we will discuss some of the different ways to find and secure the financing that you need to build your brand new business. This article is a detailed look at how to get funding for a business.
First on the list is one of the most common methods, loans. There are several different options when it comes to loans to finance your new business. There is the traditional business loan from a traditional bank. The general terms and rules apply to this type of loan; repayment arrangements, collateral, etc. There are also microloans. These do not come from traditional banks, but rather from microlenders. Microlenders are non-profits that are different than traditional banks. These loans are much more flexible than traditional business loans in that it is possible to get a loan in a much wider range, specifically, smaller. Commercial banks are generally uninterested in small loans, microloans can be as small as five hundred dollars ($500). The third type is an SBA loan. The acronym SBA stands for Small Business Administration.
Any small business can apply for an SBA loan, but there are certain criteria that must be met to qualify. The first consideration is that the SBA cannot guarantee a loan to a business that has a way to obtain the financing needed on their own. What this means is that to qualify for an SBA loan, you must apply for a loan through a bank or other financial institution and be turned down. The second qualification is that your business must meet the definition of a small business as set by the government. Other criteria may be required depending on the industry in which your business resides. If your small business meets all of the requirements, you can apply for an SBA loan at any financial institution that has the ability to process SBA loans.
Business credit card
Depending on how much financing that you need, a potentially viable option is a business credit card. This is a great method to use if you only need a bit of help and you will be able to promptly pay off your balance. Otherwise, this is a rather risky method to use. If you fall behind on payments or are only able to pay the minimum, it could create serious problems as the debt piles up. This method should only be used for small projects and short-term need. There are plenty of times where a credit card will provide that extra bit of help, but remember to keep the big picture in mind and do not get in over your head with too many charges.
Crowdfunding is an excellent choice for funding projects and start-ups. There is a multitude of sites dedicated to helping businesses and individuals raise the money needed for various things. One of the best sites for new businesses is kickstarter.com. Here you can create a page, give information about your project and what the funding is needed for along with the amount you need raise and the amount of time you need to raise it in.
Quite often, an incentive is offered to entice people to donate. This can be any number of things depending on what the project is, what can be offered, and a number of other things. As an example, an author who is raising money to publish a new book might offer a copy of the book to anyone who donates a specified amount of money. If you are going to offer an incentive, be sure that it is something that is easily attainable, inexpensive, and would appeal to your target audience.
Another possibility to consider is investors. If you can find someone willing to invest in your business, you will be set, the problem is finding someone interested in investing. For this method, you will need to be willing to reach out to potential investors and make inquiries. When you approach a potential investor, make sure you are prepared. You need to have facts, projections, and timelines ready to show them. Do not rely on jargon, use plain English and avoid getting into technical terms. Ensure that you have all of your facts prepared and laid out. be ready to defend what you are trying to do, know that there will be questions, most likely quite a few of them. Also, keep in mind that investors will want to be kept apprised of the goings on and kept up to date or the business.
The final option we are going to discuss is grants. There is a myriad of grants available for small businesses and start-ups. There are different grants specifically for different industries, different locations, and various other aspects. If you are looking for funding, you will need to take the time to research what grants are available in your area and for your industry. Once you have a list, apply for them all unless there is a conflict of interest between any of them.
The more grants you apply for, the more likely you will be to receive at least one with the potential to be awarded several. If you do not feel comfortable writing the grant applications yourself, do not hesitate to reach out to a professional grant writer. Professionals can be found in many ways. If you are located in a large enough area, there will likely be local grant writers. If for whatever reason, you are not able or inclined to hire someone local, there are plenty of professional grant writers that are more than happy to work with you via telecommuting.