What happens when you have a good idea but no funding to help get your business started? You are not alone; countless entrepreneurs have run into funding challenges when looking to build a new business. Here are 8 ideas to get you started when looking to get money for your business.
#1 Personal Savings
This may be a no-brainer, but one of the first places to check is your own personal savings. If you are one who has been savvy about saving, you probably have money stashed away for a rainy day or emergency. You probably have already started paying into a retirement account as well. However, you might want to avoid using those funds unless you really need to.
#2 Credit Cards
Using your personal credit cards to fund your business is not a bad idea, but I strongly suggest you use them with caution. Why? It’s easy to whip out a card to get the things you need, but the real problem is when you must start paying back the money (e.g., monthly payments). So, think twice and make sure you have a plan in place if you decide to use your personal credit cards for startup funding. In addition, use the one(s) that have the lowest interest rates and annual percentage rates.
#3 Home Equity
If you own a home, contact your mortgage company to see if there is equity in your home and if so, what are the steps involved to tap into the equity. The amount of the loan is determined by the value of your property, and the value of the property is determined by an appraiser from your lending institution.
#4 Friends & Family
Sometimes getting money for your business might be as simple as asking family members or close friends. Even so, it’s always a good practice to treat the relationship as a business one. Sometimes emotion can get in the way and cause family and friends to part company in a way that is not healthy, if you know what I mean.
#5 Angel Investors
Angel investors provide funding for startups, and require a stake in your business. They could be lawyers, doctors, entrepreneurs, or anyone with money (i.e., $1 million or more) that is looking to empower the next generation, while increasing their own coffers. For example, they may want 20 to 45 percent equity in your business. Angel investors should be Securities and Exchange Commission compliant (SEC).
Make sure you do your homework before opting to get funding from angel investors.
#6 Venture Capital
Venture capitalist invest in businesses that are startups, companies looking to expand and have an element of high risk. They invest for a specified time-frame. They buy a stake in the entrepreneur’s business, help them develop their business and then exit, for instance. They exit by way of an investment banker.
#7 Crowd Funding
Crowdfunding involves getting a small amount of money from many people. It is a popular way for businesses to acquire money for their startups. Kickstarter and Indiegogo are two websites that allow you to raise capital via online campaigns. For example, you could sell t-shirts as a payback to those who donate.
#8 Small Business Administration Loan
The Small Business Administration (SBA) is the last funding source for today. They are great source to consider because their loans are subsidized by the U. S. government. And, because it is endorsed by the government, banks are willing to lend at lower interest rates than traditional bank loans.
Don’t be dismayed, there are plenty of options to find business startup funding depending on your goals and your credit.
Remember, make sure you have plans in place before you receive funding, this way you won’t find yourself trying to figure out what to do once you obtain funds. Also, ensure that you are able to pay back whatever amount you borrow. As such, you should have no problem being successful in your business venture.