Getting business funding can be challenging, whether you're looking for start-up funds or capital to expand your business. In addition, given the current state of innovation and rapid business setup, securing funds is getting tougher. Even though securing funding might be tough, it becomes easier if you're willing to explore uncommon methods. To help you find the funding you need, I'll be sharing with you some business funding methods that work at the moment.
Before I get into the details, there are some very important things you need to know. Sherry Gray in her article for Entrepreneur.com listed and explained 5 Business-Funding 'Rules' to Break. In brief, the 5 rules are:
1. Startups are too risky.
2. Your credit must be spotless.
3. All online lenders are scams.
4. You must have a solid business plan.
5. Don't ask for too much.
So, what Business Funding is Available for you?
1. Personal Funds
The first place to start is using your own personal funds. Many founders contribute their personal funds along with sweat equity to start their business. The personal funds can also be sourced from friends and family members who believe in you or want to support you. However, there are instances where it may be hard to get funds from friends and family. What you could do in this case is to bootstrap. This involves financing your business through creativity, ingenuity, cost reduction etc.
2. Private Equity
With private equity, you can get investment funds from large institutional investors, university endowments, or wealthy individuals. Examples of these private equities are venture capitals or angel investor (business angels). Venture capitals are institutional investors (give funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth) while business angels are wealthy individuals. These are good sources of business funding. However, they give funds in exchange for a partial ownership of your business.
3. Bank Financing
This is referred to debt financing and in simple terms means getting a bank loan to finance your business. Other sources of debt financing are trade credit, factoring, peer-to-peer lending, crowdfunding etc. There are good debts and there are bad debts, be sure to understand these before getting a loan from any of these sources.
Locally owned banks, in particular, are a great resource for small businesses because they often have a strong interest in economic development in the community. -
4. Business grants
This is a method that offers small-business owners a way to get established or grow, without having to worry about paying back the funds. These grants are offered by nonprofits or government agencies. The fact is, many small business owners are also looking for this. Which makes it even more difficult to get. However, if you do your homework well, you will get access to the business grants.
In conclusion, the 4 business funding methods briefly described above works. You just have to explore all the methods and don't relent until you get what you desire. In addition, I am looking to invest into a small business. Let's talk if you need business funding. Simply send me a message via the contact page.
Photo credit: energepic.com from Pexels
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