Do you need to raise capital for a new business venture? If so, you aren’t alone.
Every year, small businesses in the U.S. borrow millions of dollars for business capital and fund their operations.
While money doesn’t grow on trees, there are several ways to seek funding for your business, with some being more traditional than others. Keep reading to learn what options you have to get the funding and capital you need to grow your business.
Bootstrap Your Business
If your business doesn’t operate in an industry that requires a lot of capital, such as transportation or manufacturing, it may be possible to fund your venture. It may also be more feasible than you think it is. Even if you don’t have a large amount of money in savings to run your operation, you may be able to get a 0%/low interest APR credit card for your business. With this, you can borrow cash for a set amount of time without paying interest. You may think funding a business on your own carries a large amount of risk and does in some ways. While this is true, it’s a risk worth taking if you believe in your venture. Also, when you put your own money into the business, it will make others more willing to partner with you down the road.
Launch a Crowdfunding Campaign
You will find several crowdfunding success stories “out there.” With the right pitch and product, you can be one of the success stories. Crowdfunding allows you to connect with people who think like you, with who you may not be able to engage with otherwise. Doing this will also let you see if people are interested in your product and what resonates with them. It also gives you insight into ways you can improve your pitch and product. Even more importantly, you can raise money needed to fund and grow your business with crowdfunding. Crowdfunding involves talking to people. It’s a good idea to build a strategy that may include zoom for nonprofits and other organizations.
Apply for a Traditional Loan
Technology has created plenty of new ways to raise capital; however, traditional financing products remain the main option for small businesses to fund their organization and operations. According to information for the SBA, approximately 75% of financing for new companies comes from lines of credit, credit cards, and business loans.
Usually, small business loans will have the most favorable terms, and rates come from SBA loans and term loans provided by financial institutions and banks. To get approved for a traditional bank loan, you must meet the set requirements. Before applying for a small business loan, ensure you prepare the long documents necessary to show ahead of time.
Ask Friends and Family
Raising capital by asking friends and family for help is viable for some. In fact, statistics show that up to five percent of adults in the U.S. have invested in a business that was started by someone they know. It’s best to choose a friend or family member who has some business skills. You should also narrow down your list to those who have faith in your venture, who understand the risks, and who understand what your plans are. After doing that, you should show your due diligence and passion by having direction and a business plan. Make sure you stay realistic about the money you need for your business venture, too. When someone agrees to fund your business venture, make sure you agree on the type of funding and what form it will take. For example, it may be equity in the company or a loan. If you choose a loan, be sure to agree to a repayment land and use documentation on a P2P lending platform to keep up with payments.
Funding Your Business Venture
There are more than a few things to consider when it comes to funding your business venture. Be sure to choose the right funding option, so you have the best chance possible of getting the money you need to grow and succeed.