Ways to Fund a Small Business
One of the most difficult challenges is the financing of a business. You will need startup capital, funds to get you through the first few years and money to expand. Here are your options to finance a small business.
If you need quite a bit of a capital to fund your business, then a small business loan can provide the money that you need with a low interest rate. This is one of the less expensive ways to secure funding.
You are able to go directly to the masses and get funding. With crowdfunding you will need to make your pitch and post it on the platform. People are then able to contribute towards your fundraising goals. There are cases where you will be able to keep the money raised even if you haven’t met your goal, but with others it’s an all or nothing case.
If you already have a clear value proposition and already have customers ready then you could make money through advance orders or presales. You will then get a working capital and it will also validate your business.
Personal Assets and Savings
The easiest form of funding is to acquire pre-existing money. You are also able to lower the interest rates on your loan by offering your car or home as collateral. There are risks though in cashing in your 401(k), using your emergency funds or taking a personal loan.
When you cash in your investments and savings then your income will come solely from your business and this can be a risk.
You can take advantage of grants from governments and nonprofits. This is worth investigating and seeing what your options are.