Securing the funding you need for your budding business can be tricky. Conventional lending institutions may not be willing to extend financing to many startups. Fortunately, there are several other ways to get the funds you need to start your business.
What to Avoid
While a variety of funding options are solid, some strategies could be more trouble than they are worth. You should avoid using your home to get the financing you need. Also, leave your retirement plan alone; like your home, you will need that in the future, whether or not your business is a success.
If you don’t qualify for a traditional bank loan, don’t be discouraged. You might still be able to get a Small Business Administration (SBA) loan via an alternative lending source. Another viable option could be a microloan, which may be as low as a few hundred dollars; such loans can be immensely useful to startups.
Starting a business from an established franchise might also enable you to get a franchise loan, particularly if your chosen franchisor works regularly with certain lenders.
People You Know
If you have friends, family, a mentor, or other types of people in your life who have offered verbal support for your project, the same people could serve to provide some monetary support. Whether such an individual is willing to donate a small amount or lend a larger sum, everything helps.
You might also be able to obtain some of the funding for your business via your credit cards or personal savings.
Crowdfunding is another method of securing funds for startups. The people who help fund your business through such an outlet could be a combination of people you know, as well as individuals you have not met.
Awards and Grants
Be sure to do your research on grants and awards. You could find some of the funding you need, especially if you are starting a nonprofit business.
Although it might be difficult to attract venture capital investors for your business, it is possible; however, they may want to have a larger management role than you would prefer. An angel investor (someone who is relatively wealthy) may also be willing to invest, but this is not typically the case for businesses in the startup stage.
Startups require much work and perseverance. Although you may already be frustrated with the pursuit of financing for your new business, don’t give up hope! Rotay Capital Finance is here to help.