Starting up your own company? Here are some ideas for funding
One of the biggest struggles small business entrepreneurs face is finding funding to start or expand their business. With banks being especially cautious in lending to small businesses these days, it makes finding capital even more difficult than before. Without enough capital, it’s nearly impossible to grow your business. Luckily, there are still way to get the money you need to get the ball rolling.
Harder than obtaining funding is knowing where to go to get it. There are a variety of sources to give you the money you need for your business.
Loans are typically the first resource businesses turn to when looking for funding. A great place to start looking is the Small Business Administration. The SBA doesn’t give money to the businesses directly, but instead they act as a guarantor for small businesses to help them get loans from banks or credit unions.
A line of credit is another excellent place to look for funding. A line of credit is a fixed amount of money that a company can draw against from a lender, usually a bank. A line of credit (LOC) gives your business access to cash, whenever you need it. Unlike a regular loan, interest is not charged on what isn’t used. A LOC helps businesses by accommodating fluctuating credit demands
Grants are often overlooked as a form of capital for a start-up or expanding business. Being awarded a grant takes a lot of work but since you are not required to pay them back, they may be worth your time.
If you are just starting out, you might want to look into a business Incubator. Incubators are organizations that provide resources like laboratories, office space, cash, consulting, and marketing to start-up in exchange for equity. The goal of an incubator is to help entrepreneurs operate their businesses independently and make them financially viable.
Much like grants, angel investors are also frequently overlooked by entrepreneurs trying to expand their business. Angel investors are people who invest in businesses in exchange for a high return. Networking is key when finding an investor and if you decide to take this route you want to make sure that it’s an investor who knows your industry. These angels typically use their own money and are tasking a sizable risk by investing in start-ups which is why establishing a good rapport with the investors is critical.
Don’t get discouraged if finding funding doesn’t happen immediately. It takes time to build capital for your small business and not all of these resources may work for you. Be prepared to turn to your own pocket book and friends and family but don’t forget that these options are also available.