Did you know that 99.9% of businesses in the US are small businesses? This means that there are over 30 million of them!
If you’re interested in becoming an entrepreneur, then it can be tough to crack into a niche. Not to mention, it can be even more difficult to secure funding for your venture.
However, just because it’s challenging doesn’t mean it’s impossible to get funding for a small business startup.
When it comes to funding for a small business, here are 6 things you can try.
1. Ask Your Family and Friends
These are the people who want to see you succeed, which means they won’t take advantage of you. While usually, funding from family and friends won’t be as much as with a loan, this type of funding does come with a few benefits.
For example, the loan terms are much more flexible. While you still might want to be on a “payment plan,” if you’re unable to pay the full amount (or anything at all) one month, your loved ones are more likely to be forgiving.
Also, interest rates will be significantly lower; in some cases, there will be no interest rate at all! This can really help put more money into your pockets.
However, not everyone feels comfortable asking for money from their loved ones. This is especially true if things have already become strained in the past from financial issues. Or some people might not have a reliable social network.
In that case, you might want to try some of the other options on this list.
Nowadays, it’s very easy to get crowdfunding, especially if you have an idea that many people will back. There are a few websites such as Kickstarter and Indiegogo that you can try.
Listing on a crowdfunding site does take some work though. You have to write up something compelling about your business and have appealing pictures as well. You’ll then have to do some great marketing to bring attention to your crowdfunding campaign or else you’d get little to no funding.
Also, be aware that some websites are an “all or nothing” deal. For instance, if you don’t hit your fundraising goals at the end of the campaign, all donors will get their money back.
In addition, these sites don’t help you out for nothing. Normally, they’ll take a small fee from your goal, such as 5%.
3. Traditional Loans
One great way to get funding for your small business is to apply for a loan at a lender such as your bank. Here, you have several options.
The first is the Small Business Administration (SBA) loan. If you qualify for the loan, just apply and you’ll get an amount disbursed to you.
Or you can go to a bank and ask then for a loan. It doesn’t even necessarily have to be your own bank. In fact, it’s best if you shop around and look for the best terms and rates.
You can also try getting a small business lending fund. This is government funding for small businesses that’s done through lenders of their choice. The main goal is to stimulate the economy.
Lastly, there are industry-specific lenders you can try. Check out this page for more information.
Do note that to get approved for traditional loans, you usually need a decent credit score. Otherwise, you might be refused or the interest rates might be sky-high. You’ll also have a lower limit of how much you can borrow.
Grants can be a better option than loans since you don’t have to pay the money back. Whatever’s given to you is yours to use on your small business!
However, the caveat is that it’s much harder to get grants awarded to you. This is because the eligibility requirements are very specific. But it can still be worth a try to search for grants, considering that it’s basically free money.
Some organizations to try include the National Association for the Self-Employed, Nav, and National Institute of Health. Be aware that there might be application fees or membership requirements (which costs money) attached to some of these grants.
As for government funding for a small business, you can also get grants in addition to loans. You can check out the SBA’s website to find everything that’s currently available.
5. Peer-to-Peer Lending
This is like getting a loan, but instead of receiving the money from a financial institution, you’re getting it from other people like you. Think of it as something in between asking your social network for money, crowdfunding, and getting a loan.
Basically, you put up a listing about your small business and what you’re trying to achieve. If others feel like it’s a worthwhile endeavor, they’ll give you a certain amount of cash to get started.
6. Venture Capital
Getting venture capital can be a fantastic route if it seems like your business is hot with interest. This is where you get private financing from investors who believe that you can make it in the long run.
You can find interested investors by either using a specialized platform to find them or through the SBA investment finder. Some excellent platforms to try include FundersClub and MicroVentures.
Get Funding for Your Small Business
If you’ve been worried about find funding for your small business, we hope that this article has given you some peace of mind. From asking your own social network to getting venture capital, there are tons of ways to secure funding for your great idea.
So set out and use these ideas to make sure your small business is financially secure. You’ll be setting yourself up for long-term success!
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