How To Get Money To Start A Business

Funding Ideas for Small Businesses

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Starting a small business is a large undertaking and needs to be backed-up with not only an innovative idea but also money. In many ways, it has become much easier to start your own business, but that also means it is much easier for essentially everyone to start their own business which leads to a large increase in competition for funding. Finding funding for a small business is a sticky web to work through, but once you know where to look and have plenty of persistence, you are already ahead of your competition. Due the increase in the number of small businesses, banks can require a higher benchmark for applicants to have. Those that have a high FICO score and collateral have a much higher chance of receiving the loan in comparison to those that don't. Thankfully, there are plenty of other options besides going to the bank.

Personal Investment

One of the most basic and common ways to provide funding for your business in the very early stages of the start-up is by personally investing in it. Over 90% of startups are self-funded, also known as bootstrapping. This could mean withdrawing money from your own savings or retirement account or living on ramen and water for the time being while putting every extra penny towards your brilliant and innovative idea. If you don't have enough to get it going and are sick of eating ramen, pitch it to your friends and family and see if they are willing to invest in it. Having support from others will also improve your chances with potential investors as this will show your credibility. One of the major advantages of personally investing is that you don't have to give up any equity and you retain complete control over your business.

Professional Investors

If, after having reached out to your family and friends, you still need more funding for your business, the next idea would be to approach professional investors. Before doing so, make sure you have an extremely strong business plan written up that includes a strong and measurable strategy of how you will be implementing the plan. These investors will not only be looking at the idea and how well you sell it to them, but also at your previous experience within the business sector, which can be a difficult sell for those that are first-time entrepreneurs. Keep in mind that if they do choose to invest, they will require a portion of the businesses equity and control. Similar to the banks approach though, because of the strong increase in the number of small businesses, investors are setting much higher benchmarks so that they only invest in the most promising concepts and ideas.

Grants

Grants are a great way of getting your business off the ground and can range from a few hundred to thousands of dollars. With grants, it relies heavily on knowing where to look and uncovering grants that may not be as competitive when applying. There are numerous grants for small business owners that offer funding for women. Some are aimed at those whose start-ups are focused on fashion, music and art, while others only offer the grant to small businesses that have a positive social and environmental impact. There are also a wide variety of grants only available to minorities and immigrants, so it can be extremely beneficial to check all the various avenues that are advantageous to you.

Government Assistance

There are opportunities of government funding for small businesses. The Small Business Administration (SBA), which is the largest federal funding source for small businesses, offers programs to those whose companies are aimed at scientific research and development. Once you are admitted into the program, there is a much higher probability of qualifying for various grants. It is important to note though that SBA does not assist start-ups or expanding companies, but those that are focused on research and development and export.

Crowdfunding

A relatively new way of figuring out how to get funds for a business is through crowdfunding. This is one of the most inexpensive ways to not only raise money to get the business rolling but also to promote your brand and the services or products you have to offer and get a following of customers in the process. Essentially all you have to do is choose a crowdfunding platform, create a unique profile for the business, project or service, set a funding goal and put the public request online. Supporters will often give a cash donation in exchange for company assets in either the form of rewards or equity.