Great entrepreneurs fall short because they don’t have the necessary resources to back them. More often than not – it’s the money to holds them back.
Luckily, there are many different sources of business funding if you’re willing to explore them.
In this article, we’ll share ten ways to fund a new business.
Types of business funding worth exploring
There’s no ‘best way’ to fund a business. Your decision and opportunity are totally dependent on your needs, experience, and access to capital. With that said, there are a few different ways of getting business funding that works for most ventures.
These include:
- Bootstrapping
- Small business loans
- Business credit cards
- Crowdfunding
- Friends and family
- Government grants
- Angel investors
- Venture capitalists
- SBA programs
- Home equity loans
Each of these funding sources has its own merits and drawbacks, so it’s important to do your research before deciding which one is right for you. You may need to combine several different methods to get the full amount of funding you need.
Bootstrapping
Bootstrapping means funding your business yourself, using your own savings or credit. This can be a good option if you don’t want to take on any debt. However, it can be difficult to fund a business entirely through bootstrapping, especially if you’re starting a large venture.
Small business loans
Small business loans are another option for funding your business. You can apply for a loan from a bank or other financial institution. The interest rate on a small business loan will vary depending on the lender, but it’s generally lower than the interest rate on a personal loan.
Business credit cards
Business credit cards can also be a good source of funding for your business. Many business credit cards offer 0% APR for a period of time, which can give you some breathing room to fund your venture. However, you will need to be sure that you can pay off the balance before the introductory period expires, or you’ll be stuck with a high-interest rate.
Crowdfunding
Crowdfunding is another option for funding your business. With crowdfunding, you raise money from a large group of people, usually through an online platform. This can be a good option if you have a great idea but don’t have the personal funds to get started.
Friends and family
Friends and family can also be a source of funding for your business. If you have people who believe in your idea and are willing to invest, this can be a great option. However, you should be aware that taking money from friends and family can put a strain on your relationships if things don’t go well.
Government grants
Government grants can also be a source of funding for your business. These are usually need-based, so you’ll need to demonstrate that your business will create jobs or provide some other benefit to the community.
Angel investors
Angel investors are another option for funding your business. These are typically wealthy individuals who are looking to invest in promising startups. Angel investors usually provide more money than other sources, but they also usually want a higher return on their investment.
Venture capital
Venture capitalists are another source of funding for your business. These firms or individuals invest in high-growth businesses with the expectation of making a profit. Venture capitalists usually require a significant equity stake in the company and a seat on the board of directors.
SBA programs
SBA programs can also be a source of funding for your business. The Small Business Administration offers several programs that can help you get started, including loans, grants, and technical assistance.
Home equity loans
Home equity loans are another option for funding your business. If you have equity in your home, you can borrow against it to fund your business. However, you should be aware that this puts your home at risk if you can’t repay the loan.
Do your financial due diligence
There are many different ways to fund a new business. The best option for you will depend on your individual circumstances. Be sure to do your research and explore all of your options before making a decision.
For more insights on how to launch and grow your business, check out more of our guides and resources here on AllSmallBusiness.com.