5 Ways to Fund Your Small Business or Startup

OlufisayoApril 18, 20230143 views

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The beginning of your business or startup should be one of the most exciting moments of an entrepreneur’s life. The chance to be a business owner and take care of matters in one’s own hands can be rewarding. But taking care of a business alone requires a lot of responsibility and ensuring that all the Ts are crossed and the Is are dotted. And that also includes finding a reliable source of money in order to get a small business off the ground. To start off on the right foot, here are five ways to fund your startup or small business.

Getting a Small Business Loan

If you want to maintain control of your business but don’t have the funds to start, getting a loan is a good option to go with. But first, you have to get approved first. You have to demonstrate to lenders that you have a business plan, expense sheets, and what your financial projections are going to be for the next five years. Shop around at the credit unions with small business loans in your area to see which one works best for your financial vision.

Looking at SBA-Guaranteed Loans

SBA (Small Business Administration) loans are provided to those businesses that banks consider too high-risk to invest in. If you find that you might not be eligible for regular loans, you might be able to be approved for an SBA-guaranteed loan. Visit the SBA website to see if you can be approved for one of their loans.

Using Crowdfunding

Crowdfunding is the process of obtaining funds from a large number of people. These people should not be confused with investors, since they don’t receive a share of the ownership of the business. Nor do they expect to receive a financial return on their money. What crowdfunders do expect to receive is some kind of gift as thanks for their contribution to the company’s funds. Crowdfunding works well for creative projects as well as high-tech products.

Consider Self-Funding

This is also known as bootstrapping and involves you leveraging your own resources in order to start and support your own business. It can come in the form of funds from family and friends, money in your saving account, or tapping into your 401(k) to get started. Control of the business is retained through self-funding, but all of the risks are assumed by you and you alone. And that means that you have to keep a careful eye on all of your spending and where your money is going.

Obtaining Venture Capital from Investors

Investors can provide you with the funding you need to start your business by offering capital investments. These are offered in exchange for ownership shares as well as having an active role in the company. Venture capital is much different from traditional financing since it focuses on high-growth companies, invests capital in return for equity instead of debt, has a longer investment horizon, and takes higher risks for potential higher returns. Most, if not all, venture capitalists will want a seat on the board of directors.

There’s no need to go through the process of starting your new business alone. Getting some financial help can set you on the right path towards success. Speak to your local financial advisor to see if there’s any help you need.

Photo by Shane on Unsplash

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