We know that getting funding for your business is not easy. Small business grants, start-up loans, business lines of credit—the list of options is difficult to sift through, and to achieve success with them is even harder. Banks and other financial institutions have an extremely high standard for what they will finance. In fact, 77% of small businesses that apply for a loan from larger banks are rejected. There are so many reasons why it can be so difficult to get funding for your business, especially if you are just getting started, whether you are an entrepreneur, small business owner, or web startup. That’s why your best option as a business owner is to be strategic about the way you approach this issue.
The first step is to determine how much funding you’ll need. The amount will depend on the type of business you are starting. The U.S. Small Business Administration found that micro businesses have a start-up cost of around $3,000 and home-based businesses are around $2,000-$5,000. It’s good to keep in mind that some small businesses can survive with very little funding. Make sure to do your research and find out what the average cost is for your industry before you go asking for money. That way, you won’t be overreaching and asking for money you don’t need.
The next part is the most difficult, and that is choosing your funding solution. In the United States, there are several different tips you can follow to increase your funding and funding sources that you can tap into. They include:
Friends and Family
This is a great starting point! Use your network to see if they would be willing to invest in your business. If not because of lack of funds, then maybe just as a show of support.
This is a great start if you have some money that you can put into your business with the understanding that it will not be returned. If you don’t have any savings or if that won’t be enough to get your business off the ground then it’s time to talk with your bank.
You’ve probably heard of companies like Kickstarter and GoFundMe that allow regular folks to raise money online for all sorts of things. Well, it’s also possible for your business to seek crowdfunding via these sites or others like them. You can use these sites to help get the word out about your business and you can even offer incentives in exchange for donations. Just be sure to read the fine print and follow their rules; especially if they will be hosting your fundraising campaign.
There are several different types of grants that you can apply for, including government or state funding. Many times, they require a matching contribution from the business owner or entrepreneur that is starting up the company, so be prepared to invest some of your money into the project as well. Make sure to do your research and find out what the average cost is for your industry. That way, you won’t be overreaching and asking for money you don’t need. Also, be aware that most grant applications have strict requirements and they usually have a limited timeline, so be sure to read all the rules before you apply.
Business loans are the most common form of funding for small businesses and start-ups. These loans are pretty reliable, yet they will require a more in-depth application process and criteria. When you apply for a business loan, you will need to prove yourself as a responsible and capable business person. This is not an impossible feat if you have the right management plan in place and your personal credit report reflects that you are financially responsible.
An SBA loan is a great business fund solution for small businesses and beginner business owners. SBA actually stands for Small Business Administration, which is an agency within the federal government in charge of supporting small businesses with direct funding opportunities. SBA loans are government-backed, meaning that the SBA will guarantee some of the risks for the bank providing the loan. SBA loans are extremely flexible and made to fit your needs—no matter how big they are! Nonetheless, stay prepared in case your credit needs to be checked.
Cash Flow Based Term Loans
Cash Flow-Based Terms loans are very easy to obtain and provide the company a great amount of capital. Cash Flow Based Term Loans are perfect for those business owners who are eager to expand their company. The application for these loans takes as little as 10 business days and can be completed entirely online. These loans cater to the need of borrowers looking for rapid acquisition of a business loan. If this appeals to you, learn more about and apply for a cash flow-based term loan here.
Business Line of Credit
Business owners who are looking for funding to start-up or grow their company, yet don’t need a long-term loan might consider getting a business line of credit instead. Business lines of credit can be taken out and repaid as needed, which makes them great for companies that do not have consistent revenue streams. A line of credit may be the right solution for you if your company needs short-term financing. This type of financing is typically more expensive than a business loan due to the risk exposure, but with lower interest rates.
Business Credit Builder
Business credit builder services are a feasible solution for the funding of small businesses. Entrepreneurs and business owners find business credit builders to be advantageous for the financing of projects and new ventures. These services will build up your company’s credit, improve the business’s credibility and trustworthiness for a specific period of time at a small fee. This can make it easier for small businesses to get access to financing in the long term.
Business Revolving Line
A business revolving line is a funding solution for those business owners seeking capital with short-term repayment dates. This type of capital is especially beneficial for your business as it allows you to cover the daily operational costs associated with running a business, such as payroll expenses or inventory costs. A business revolving line can be used for numerous purposes within the company.
These are just a handful of the various business fund solutions. If any of this seems confusing or overwhelming, we have exciting news for you! Corporate Capital Direct is a business fund assistance company that can help. CorpCap Direct has years of experience in the business finance industry and our team is eager to assist you with whatever financial needs your business might have. Book a meeting with our Corporate Capital Direct funding advisors or call 888-348-8388.