Many individuals envision starting their own business in hopes of having success, working for themselves, and doing something they truly care about. While anyone can open a business, getting started isn’t easy once you think about getting started: where is all this money going to come from?
Small companies are more common than you realize. More than 50 percent of individuals are employed in a small business.
If you’re committed to creating your own company but don’t have the capital you need, don’t lose hope. There’s more than one way to figure out how to finance a business.
Check out these suggestions and see which one is right for your budding company.
1. Get a Traditional Bank Loan
Bank loans are the most common way for a business to get started. While this tends to be one of the strictest lending methods, it’s worth a shot for potential business owners with great credit and a solid business plan.
In some cases, you’ll get asked to present collateral, while others might simply have higher interest rates. Make sure to shop around and find the best deal to suit your needs.
2. Use SBA Loans When Planning How to Finance a Business
The Small Business Administration, also known as the SBA, offers loans for new and small businesses that need help getting started. Qualifications are strict, so get ready to present a business plan and show what the funding would get used for.
Even if you don’t end up getting a loan through the SBA, they offer a wealth of information. Check out their comprehensive learning center to learn more about setting up a small business.
3. See How Crowdfunding Can Make a Difference
Crowdfunding usually brings to mind ideas of folks raising money on a platform. One of the most popular is Kickstarter, which helps entrepreneurs promote and raise capital to get up and moving.
There’s nothing wrong with the type of funding, but it might depend on the business. Using Kickstarter for the entertainment industry is commonplace, such as raising money for movie production, but it doesn’t always translate well to every business venture.
Consider what type of company you’re opening and whether crowdfunding fits that image or not.
Make sure you’re aware this is best for just getting a foothold or launching your business. In other words, you won’t turn to crowdfunding every time you need a loan.
4. Ask Friends and Family to Pitch In
Turning to friends and family is where many people go when they need help. Starting a business alone can be tricky, and it’s not uncommon to turn to your loved ones for help in running and managing a company.
If you have relatives who have the means to invest, it’s worth asking them to consider doing so in exchange for partial ownership or some similar kickback.
But even if you don’t have a wealthy uncle or grandparent, you’re still in luck. Check out this website for loans and see what other options are out there.
Managing your business on a budget? Look at these tips to help make life easier for you and any loved ones on your team.
5. Look at an Angel Investor Program
Angel investor programs work similar to treating investing family and friends as shareholders, but it can be done with anyone.
In this case, you’ll need a solid business plan that includes plenty of details. Investors want to know what they can expect and what happens to the business if something heads south.
Unlike owning and running the business with only yourself in mind, you’ll have to act in the best interests of everyone. This includes customers, yourself, employees, and shareholders to boot.
6. See If There’s a Loan for Your Industry
Before you limit yourself to traditional loans or alternative methods, see what options exist for businesses in your chosen industry. For example, companies that are franchises often have loans or other benefits set aside just for them, to help the business grow.
Consider an industry-specific loan similar to a college scholarship: it’s there to help individuals interested in a certain path to succeed and do the best they can. If you choose to hunt for this type of funding, it’s often easier to get approved since you’re dealing with less competition in the long run.
7. Check Out the Advantages of Microloans
Microloans are another popular new type of loan that has gained popularity. These loans are much smaller than anything a bank would offer or approve.
If you’re needing a loan for supplies or equipment but can’t deal with the hassle of other traditional methods, this provides a helpful alternative. When there’s a gap in what you need to get off the ground and don’t want to deal with as much documentation, get a microloan and see how your business can finally start to soar.
Discover More about Business and Lending
No matter what type of company you’re trying to get off the ground, there are lots of different options when it comes to finding out how to finance a business.
From working with investors or family and friends to taking the traditional route in a bank-approved loan, there’s more than one method when getting started. You might find that over time you’ll utilize different loans too as your business grows and expands.
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