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Proven Ways to Fund Your Small Business

For an entrepreneur, finding ways to fund a business is one of the most difficult tasks. As the saying goes “It takes money to make money”. It’s imperative to find sources of funding as soon as the business is launched. Initially, you can’t rely on revenue from the business to help you run the business, and so being able to secure funding from external sources will be the only option.

There are several proven ways to acquire funding for a small business. However, they need to be thoroughly looked into in order to determine which one will be the ideal fit for your business. Let’s take a look at proven ways to fund your small business.

Bank Loans and SBA

Banks seem like the most obvious source of funding. They should be the priority when funding is required for a business. This is because banks are trustworthy, reliable, and efficient in terms of transactions. However, over the years, banks have somewhat raised the bar for providing funds to small businesses. They have stricter standards nowadays, but there are still several banks out there that set aside funds specifically for the purpose of providing capital to small businesses.

However, if for whatever reason you can’t come to an agreement with a bank (which may include an inability to provide guarantee or collateral) there’s always the alternative of the SBA. SBA is the Small Business Administration that collaborates with lenders and provides loans to new startups and small businesses. They have a lengthy process, but their interest rates are relatively lower.

Venture Capitalists

Venture capitalists are one of the best ways to acquire funding for a small business. They are a group or organization of individuals which take part ownership in the business and in return provide the necessary capital. The shares bought by a VC and the capital or funding received can be negotiated. This option has another huge advantage: they don’t just bring in capital, they also bring in experience and an abundance of knowledge, which assists the business. Along with that, they have an immense number of connections that can solve multiple problems for your business and pave the way to success.

Grants and Online Lenders

Grants are one of the most financially expedient ways to gain capital for your business. Even though grants are a bit difficult to acquire because they have strict eligibility criteria, that shouldn’t stop you from applying. If you run an online business, there are multiple online lenders who are willing to provide funding. If you run a website, and you have employees who get paid to type articles or blogs, then there are platforms out there that can help you access the capital needed to expand your domain. Here are some of these platforms:

  1. Kabbage
  2. OnDeck
  3. PayPal
  4. Lendio

These platforms provide grants for startups and small businesses, even if it’s an online business or domain. They each have their own terms and conditions. For example, PayPal provides grants only if their platform is used for financial transactions.

Crowdfunding

Crowdfunding is also an amazing way to get funding for a small business. There’s a common misconception that venture capitalists and crowdfunding are the same things. Because venture capitalists demand equity in the business, people usually think twice before proceeding to engage with VCs. However, crowdfunding involves asking many people to provide funding and donations for your business and in return, they receive a small gift rather than equity or shares in your business. This makes it a low-risk endeavor because it doesn’t necessarily compel the owner to pay back the donors. However, there is one downside to crowdfunding. It’s time-consuming, and it takes a great deal of work to start a crowdfunding campaign. These campaigns themselves also require a certain amount of capital to operate.

As an entrepreneur, you’ll know that running a startup or a small business will almost always require funding. This funding can be achieved through various platforms and in many ways. Bank loans are an excellent choice if you’re looking for authenticity and efficiency, but some banks don’t provide funding to small businesses. Fortunately, there are other approaches you can try such as crowdfunding, government grants, and venture capitalists. Other options include micro-loans and self-funding. Even if by some miracle your business starts to generate revenue from the very first day, you’ll still need funding in the days to come, to expand your business. The above-mentioned ways are proven to provide a reasonable amount of capital to all but ensure the success of your small business.

Written by Marcus Richards

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