Having a billion-dollar idea for a startup is great, but now what? Regardless of how good your idea is, you’ll need funds to get it going. Deciding on how you will fund your business is one of the most crucial financial decisions you’ll make. Here are four small business funding options to get you started.
Small Business Funding Options
1. Bootstrap Your Business
Bootstrapping your business means scrapping together whichever money you have on you. If your startup doesn’t require much capital, then this is the best way to go. Bootstrapping enable you to fund your future without relying on any external financial help.
Even if you don’t have enough savings in your account to fund your startup, you can still get an APR business credit card that lets you borrow money for a given duration of time, at zero percent interest.
It’s no lie that using up your savings to fund a business is a risky undertaking, but it bears many potentials. For example, investing your own money when starting the business demonstrates your confidence in the business. This makes investors and lenders more likely to partner with you in the future.
2. Applying for a Small Business Grant
According to Lantern Credit, business grants are small lump sums awarded to business owners. Unlike loans, business grants don’t have to be repaid. They are awarded by local, state, or federal governments or private corporations.
Some business grants come with clear stipulations about how the money should be spent, while others don’t. At the end of the day, you’re still getting free money, so that’s great, isn’t it? If you do not know how to apply for a small business grant you can search for several guides on a search engine.
3. Launch a Crowdfunding Campaign
With the right pitch and product, you can join many entrepreneurs out there with excellent crowdfunding success stories. This small business funding option is growing in popularity.
An excellent example of such entrepreneurs is Formlabs, a manufacturer of affordable 3D printers. In 2013, Formlabs raised $3 million in Kickstarter. Eventually, they got the attention of other investors, who invested an additional $19 million. This enabled them to scale up their production of affordable 3D printers.
Crowdfunding gives you a chance to pitch to like-minded investors, who you wouldn’t usually be able to engage. It also enables you to gauge interest in your product, so you can tell what’s resonating with people and what’s not so that you can improve.
To run a successful crowdfunding campaign, you need to develop your story, as most potential investors want to know how you turned your idea into reality. Other than that, you need a high-quality video pitch that shows the value of your product, the needs it addresses, and why you need their support.
4. Apply for a Loan
As much as technology has simplified how we get capital, traditional funding methods remain the most commonly used finance source for small businesses. According to the Small Business Association (SBA), up to 75% of funding for small businesses comes from business loans, lines of credit, and credit cards.
Small business loans come with the most considerable rates when compared to other loans. To qualify for a small business loan, you need to:
- Have been in business for two or more years
- Have good credit
- Have a business with substantial annual revenues (at least $100,000)
Getting funding for your business has never been easier. Now, with a good pitch, you can reach thousands of potential investors and financiers around the world. Or you can choose to go the traditional way and apply for a small business loan. Either way, these small business funding options can help make your dream come true.