Starting a business is exciting. Unfortunately, before you can really make your business dreams come true, you need money. Few of us have the resources to independently fund a business on our own. Whether you need $10,000 or $100,000 to get your business up and running, chances are that small business or startup funding is required if you want to move forward with your business dreams.
The good news is that there are a number of options available when it comes funding your small business or startup. Whether you are looking to shore up your existing small business operations, or whether you are at square one and need to cover startup costs for your small business, here are several different ways to get the money you need:
SBA Loan from a Small Business Lender
For many small businesses, the first stop is a conventional lender. The government is willing to guarantee certain loans in order to encourage businesses. SBA loans offer you the chance to help your business grow, providing you with long-term or short-term capital opportunities. And, in addition to providing more “traditional” loans, the SBA also offers access to microloans.
SBA loans can be a little more difficult to qualify for, especially for startups. If you want to qualify for an SBA loan, it helps to already be established, and to have a solid plan for continuing to gain revenue. Your local SBA lender is a good place to start, but you will likely need to move on to other financing resources, especially if your business is a startup.
There are also a number of great startups providing funding opportunities. Companies like Kabbage offer an alternative to traditional SBA lending, while still offering a somewhat-traditional approach. If you are just looking for a little extra cash to bridge a gap in your cash flow, Fundbox is a quick way to smooth things over. Traditional lending is expanding, thanks to additions to the fintech space.
Online Loan Aggregators
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Another good place to look for loans when you are shopping around is to check with online business loan aggregators. Web sites like RateZip offer access to a variety of lenders and loan terms. You enter information about your small business, whether it is an existing business or a startup, and you can see what all your options are.
This is also a good way to find the best possible rate for your business loan. You can choose from different rates and terms, and see what others are willing to offer you. With more options to choose from, you are far more likely to find something that works for you. Plus, the Internet provides you with more access to lenders that you might not have access to locally.
P2P Lenders
In the aftermath of the financial crisis, P2P lending became popular as “regular” banks wouldn’t lend to business owners. Even now, P2P lending is still a great resources for small business funding. You can’t borrow more than $35,000 in most cases, though. For smaller business funding needs, you might be able to get a loan at a reasonable rate if you turn to places like Lending Club and Prosper.
Crowdfunding
Another option these days is crowdfunding. I, myself, ran a successful crowdfunding campaign through Indiegogo. Another popular crowdfunding platform is Kickstarter. Both of these platforms are seen as “gift” platforms. Those who provide you with money via these web sites don’t actually receive anything in return, other than “perks” you provide. With these platforms, you can choose to try and raise money in an all-or-nothing way, or keep what you do manage to raise. In order to avoid even giving out perks, it’s also possible to use a site called GoFundMe. This site, unlike other crowdfunding platforms, don’t require you to offer something in return to funders. In all cases, though, crowdfunding can be a way to raise money from family and friends, as well as strangers, reaching a global audience through social media.
Recently, though, a new type of crowdfunding has been approved. In the United States, you can use securities investment crowdfunding to raise money. This arrangement, though, requires that you offer investors (who must be accredited investors) ownership in your company. There are social securities crowdfunding platforms that you can use to raise money in a way that makes a little more sense for you, as well as provide you access to more potential investors.
In the end, if you are interested getting funding for your business, you have options. While you might have to pay higher interest for some loans, or make other efforts to convince potential funders to support your idea.
If you are looking for a leg up for your business in 2015, there’s a good chance you’ll be able to find it.
