4 Ways Small Businesses Secure Funding

Small business funding is often an end to a person’s dream of starting their own business. It's difficult to get started in business, but it’s almost impossible to start if you can’t find the funding to bring your business to life.

Yes, you can bootstrap the business, work extra hours and make it work - a lot of businesses start this way.

But there are times when funding is necessary. You may need to buy inventory to fulfill an order, or you may need capital to fulfill your payroll requirements while waiting for an invoice to be paid.

Small businesses have a lot of means to secure funding.

Bootstrapping is one way, slowly growing your savings account, using credit cards (a personal risk) and slowly growing the business. But there are other options to fund your business.

1. Ask Friends and Family

You might think this is outlandish, but friends and family may want to invest in your company. Amazon is here today because of Jeff Bezos’ parents investing $245,000 into the company. Few families have this level of investment to give for a business, but every bit helps.

The return on his parent’s investment would make the parents worth upward of $30 billion due to Amazon’s growth since 1995.

Bezos’ parents haven’t disclosed how many shares they own in the e-commerce giant, but estimates are that the duo owns 16 million shares of Amazon.

Friends and family may want a share of the company or profits, or they may be satisfied with a repayment of their investment. In either case, make sure that these individuals know that there’s a chance they may never see their money again – businesses fail.

2. Crowdfunding

If you don’t want to involve friends and family, you may want to consider crowdfunding. Investors from all over the world can help fund your business, and it’s helped start some of the world’s most innovative companies.

Sites where you can crowdfund your idea are (and this list isn’t extensive):

Sites where you can crowdfund your idea are (and this list isn’t extensive):

Crowdfunding is a great way for you to bring unique ideas from prototype or idea to fruition.

3. Self-Funded Options

Bootstrapping, or self-funded options, are extensive, and while I touched on this previously, there are many ways to self-fund. You can opt to use the following financial avenues to fund your business:

  • Credit cards
  • Equity from your home
  • Personal loans
  • Savings
  • Retirement accounts

But keep in mind, this is a major, personal risk to you personally. If the business fails, you’ll be the one in debt and left with a damaged credit score.

4. Search for Grants

Grants are available that will allow small businesses to start and prosper. Government grants are often available that will allow you to secure “financing” for your business that is to be used for specific purposes.

These grants will have restrictions, and they’re tied to very specific fields.

For example, you may be able to secure grants for:

  • Energy efficient technology
  • Childcare
  • Eco-friendly projects
  • Non-profit organizations

Government grants are available, but they may take some time to secure. You'll want to contact the Small Business Administration for guidance on grants in your field.

Filed under: Entrepeneur

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