5 Ways to Get Financing for Your Small Business
A business start-up comes with a lot of responsibilities. Once the business plan is in place, the focus has to shift to the finances needed to fund the business. The costs begin almost immediately. The new business owner does not want the stress of wondering where they are going to be able to generate the money needed. While there are many business financing ideas and options available, here are a few of the top ideas on how to finance your restaurant or retail business. Here’s how.
1. Personal Money
With a new startup creating so many different needs for money, it can be a challenge to decide what needs to be funded first. Business costs start right from the time you decide on a business name. For instance, to retain that business name, you need to register a company name via a company formation. Registering a new entity costs money, but it is one of the first requirements to legitimizing your idea.
For many, the first inclination is to use personal money to make essential purchases. The money can come from savings, and you can finance everything yourself, leaving you with total equity in the organization. One important factor to keep in mind is not only will you need cash for business purchases, but you will need working cash flow. You probably have other financial responsibilities. Therefore, you will need funds to deal with these. If you use up all your savings for your business startup, it could leave you in a precarious situation financially as you move forward.
2. Investment Opportunities
Many new business owners have friends and family behind them who are supportive of what they are doing. If this is the case for you, it may be that you are not comfortable taking offers of money from them. You could take the money based on an investment opportunity. Depending on your business’s nature, there may be a chance for you to make a shareholder arrangement with them. Or, you may want to seek out some fund managers or angel investors that may have an interest in your business.
3. Lending Institutions
Many of the lending institutions use new business start-ups as a way for them to develop new business for themselves. They are aware that funds may be tight for new business development. Lending institutions such as Banks and the SBA (U.S. Small Business Administration) may be prepared to give you a small business loan. They will review your business’s viability to help them make their decision about lending you the required funds. You will need a solid business plan to approach a lending institution.
A great resource to consider is SCORE.org, a nonprofit organization backed by the SBA that promotes mentoring and free tools to help small business owners find the necessary resources to help navigate the landscape and get started on the right foot.
With a business cash advance from Harbortouch, you can get the working capital your business needs without having to approach a bank or worrying about the long-term credit card interest charges.
4. Free Money
The Government is always interested in ways that they can grow the economy. One of the ways they can do this by supporting new business growth. They often will do this through grants. For the new business owner, this is a great way to achieve start-up funding. There is no commitment needed to pay back the subsidy from the Government. There are different types of grants. Each of them is going to have their criteria for the business to qualify for these.
The business owner first has to determine what grants are available. Some of these are replaced over a period with different forms of subsidies. Some grants may be available for a new startup. Others may be available for encouraging employment. Then there may be others for established businesses to continue growth. For more information, visit grants.gov.
5. Third-Party Investors
Going outside of the realm of friends and family for business start-up money may mean turning to resources like angel investors or Crowdfunding. Crowdsourcing does not apply to every business. Generally, if one is looking at crowdfunding options like GoFundMe or Kickstarter, their company has a new product or idea to launch. It will need to attract interested investors from these types of crowdfunding platforms.
Angel investors are another avenue to consider. They are usually private individuals or small investment firms that invest in your company for a vested interest or equity with an angel investor. Angel investors generally want to see proven growth and have an existing strategy to recover investments. An angel’s advantage is they will have experience in running and growing businesses that can help you, but you have to be cautious about losing too much of your ownership stake.
These are but a few business financing ideas to consider when looking for business start-up money. In the end, you want to rely on those business financing options that will put the least amount of financial stress on the business. With any financial decision that impacts your business, it’s always a good practice to consult with a professional CPA or a business attorney to make sure you’re meeting your business goals.