(Newswire.net — June 9, 2022) —
Starting a new business can be exciting, especially if you’ve long dreamed of becoming your own boss and doing something you’re passionate about. However, money can be a significant barrier to starting your venture, particularly if you need to lease a business premise, purchase stock, and cover the many startup costs to hit the ground running. While challenging to establish yourself as a business owner, it can be entirely possible when you explore the many different funding options. You might see the value in any of these possibilities below.
Your Personal Funds
Using your own funds can be a straightforward way to start your new business venture in earnest. Take a look at your financial situation and see whether it’s possible to cover some of your startup costs using the money you have saved.
If you don’t have a significant amount of savings to tap into, you might look at cutting your weekly expenditure through budgeting and even debt consolidation to make your debt repayments more manageable with a lower interest rate. Some people also tap into their 401K. Even if your personal savings aren’t enough to cover all business-related costs, they might be more than sufficient to lay the groundwork for success.
A Small Business Administration (SBA) Small Business Loan
The United States government wants to see small businesses succeed, which is why the Small Business Administration offers an abundance of funding options. You might be eligible for SBA-guaranteed loans and even some of the SBA investment programs.
There are at least three investment programs on offer through the SBA, including the Small Business Investment Company (SBIC), Small Business Innovation Research (SBIR) program, and Small Business Technology Transfer (STTR) program. These programs require you to meet particular criteria, but they might entitle you to a great deal of support to kickstart a successful venture.
Venture Capitalists
You might know you have an excellent business idea, but funding it and putting the business in the best position for success might seem impossible. In that case, you might consider venture capitalists to play a part in developing your idea into something exciting.
Venture capitalists are people or businesses with money to invest in companies with great potential for profit and growth. In return for their investment, they request a share of equity and, sometimes, a voice within your company regarding its management. When you lack administration experience, their insight and guidance can be invaluable during the early stages of starting a business.
Crowdfunding
Some of the most successful businesses started with a simple idea and a post on a crowdfunding platform. When you have an excellent idea for a product or service, there’s no reason why you can’t reach out to a crowdfunding platform, share it with people who believe in giving entrepreneurs a step up, and receive money to turn your idea into something spectacular.
What investors receive in exchange for their funds can depend on their investment. Some people might acquire a stake in the business, while others might receive free products or be first in line for new product releases.
Crowdfunding can be a time-consuming process, but it can be worthwhile for many would-be business owners who believe they have something unique and want as many people as possible to be a part of the exciting journey.
A Bank Loan
Bank loans can be reasonably straightforward to secure for a range of things like home renovations and new vehicles. However, they can sometimes be much harder to obtain for a new business with no earning history.
However, there’s no reason why you can’t travel down this route and see if you’re eligible. Typically, banks want to see a financial forecast and business plan that essentially describes how you’ll be able to pay the loan back. Some banks also require collateral, which means they have something of value to take in the event that you’re unable to pay back your loan.
Friends and Family Loans
Borrowing from friends and family is not always a good idea, especially when it’s arranged on a handshake and expectations haven’t been made clear. However, when you’re unsure how you’re going to fund your business and need a short-term helping hand, it might be an option you consider.
Borrowing from loved ones can require a great deal of care and boundaries from the beginning. Consider discussing your loan options with your friends and family and enlisting the services of a lawyer to draw up a loan agreement detailing the loan figure, repayment frequency, and interest rates, if applicable. When you structure a loan from a friend or family member as if it were a business transaction, it might be less likely to become a cause of contention for both parties.
Angel Investors
There can be more to starting a new business than searching for funding. You might also be looking for a mentor or someone with expertise who can help you grow into the role of a successful company owner.
Angel investors are traditionally people who can take on this role. They are individuals with high net worths, such as business people, accountants, doctors, and lawyers, who look for businesses to finance. In return, they take an equity stake in your company and provide ongoing feedback, guidance, and support to protect their investment and yours. Sometimes, more than one angel investor can be involved in business funding, which might mean you part with more equity than you anticipated, but receive more help.
Credit Cards
Credit cards are generally not recommended for significant business costs due to their traditionally high interest rates. However, if you need to bridge a funding gap or cover any unexpected or small-scale expenses, they might be something you utilize during those early days of business ownership.
Unlike loans from businesses and lending institutions, credit cards are flexible. You don’t have to justify what you’re using them for, and you might be able to avoid high interest rates by paying them off in a timely manner.
Coming up with a significant sum of money to kickstart a new business venture might seem impossible, but it doesn’t have to be. There are many different funding avenues to tap into, and any of these options above might be worth your consideration.