4 Options for Funding a Small Business
Laying the foundations of your small business requires dedication, planning and a great deal of money. However, it can be difficult to get a traditional loan as a startup since banks don’t want to invest in an enterprise that doesn’t have a proven track record. Fortunately, you have other options.
More and more often, companies are getting their start through alternative lending. If you have a brilliant idea, but no funding to get it off the ground, here are four routes you can take.
1. Small Business Loans
Many lenders have loans specifically designed for small businesses. These are generally easier to get than traditional loans and are structured to accommodate the unique needs of small businesses.
This lending is facilitated by the Small Business Administration, which is a federal government body dedicated to supporting small businesses. The SBA partners with lenders to extend government-sponsored loans to qualifying entities.
2. Angel Investors
An “angel investor” is someone who offers to fund for a project in exchange for partial ownership. Generally, these individuals are willing to invest without a guarantee of success because they believe in the startup’s core ideas or founders.
One thing to keep in mind is that angel investors are going to own a piece of your company long after the need for their capital is gone. This arrangement isn’t ideal for every business, so consider future repercussions carefully before you proceed.
3. Inner Circle Funding
Instead of petitioning strangers for funding, why not approach the people who know you best? Friends and family may be more willing to invest in your venture because they know you as a person. Additionally, loved ones who become partners are more likely to be around for the heavy lifting such as getting a location ready for opening or running the store.
It’s easier than ever to forego traditional lending and raise the funds yourself. If you have savings or good credit, you can use your own money or credit lines to get your business off the ground.
However, you can also make use of one of the world’s greatest resources: the internet. Sites such as Kickstarter and GoFundMe give you a platform to gather funding from millions of strangers without having to offer part of your company in exchange.
Getting funding for your startup doesn’t have to mean stacks of paperwork that end in rejection. You can use alternative lending to breathe life into your dream and even become the next big mover and shaker.