Wanting to become a business owner is the dream of many of us. Starting your own company, being your own boss, earning the trust of loyal customers who believe in your project is great. However, being able to achieve this is, unfortunately, easier said than done. One of the biggest challenges is figuring out how to fund your small business and start running operations. Even when there are many different ways to find this capital, not all of them are as accessible to entrepreneurs.
Crowdfunding has become a very popular way to fund your small business, especially within social media channels. Microfinancing is another option that has seemed to work for small and medium businesses, too. Also, getting capital from friends and family is quite a realistic alternative. Lastly, getting a loan through the Small Business Administration should also be considered.
One of the most popular ways to fund your small business is by using a crowdfunding site. This is ideal for short term projects instead of long-term investments. By creating a campaign, your friends, family, and potential customers can pledge money for you to reach your goal in a given period of time. In order to attract them, you offer some kind of incentive in return. Whether you decide to offer a reward, a payback on a loan, or a portion of your company, crowdfunding tends to work wonders. Kickstarter, IndieGogo, and Patreon are some of the most popular sites for this.
Unfortunately, many first-time entrepreneurs find themselves struggling with a lack of credit history or collateral needed to get a bank loan. However, your business idea might not need to get a seven-figure loan to get started. Through microfinancing, you could get a loan of smaller amounts, say $10,000, $25,000, even $50,000 to help you get started. There are many companies that grant microloans for amounts that banks wouldn’t really bother with. Nonetheless, remember to take them as seriously as you would a transnational bank, and be as professional as possible.
Asking Friends and Family
As the saying goes, ask and you shall receive. Sometimes finding ways to fund your small business is easier than you think. Asking for friends and family to believe in your project and support it financially might sound scary at first. Nevertheless, there are many stories of successful companies that started borrowing money this way. Yet, before approaching them, there are some aspects to consider. Remember to prepare and present a formal business plan and include the potential risks. Also, ask for a specific amount based on actual needs. This will inspire confidence and you will show you have actually thought this through.
Last but not least, another great way to fund your small business is through a Small Business Administration loan. The SBA offers different types of loans that vary depending on the type of business you want to start. Thus, these loans tend to go from $1000 all the way to $50,000, and each tends to have different requirements. Nevertheless, applying for an SBA loan is not as hard as you might think. The first step if checking that you would qualify for one of their loans, and then finding a lending partner to help you with the application process.