As you’ve probably gleaned by this point in our guide to small business funding, the answer to how to get funding for a small business isn’t always cut-and-dry.
Though debt financing and equity financing are your two main options, your small business funding options are only limited to how creative you’re willing to get. The different types of funding available for small businesses are expanding every day, you’ve just got to be willing to try something new. Don’t turn a blind eye to the following, less widespread funding options for small businesses—one of them might just be your perfect small business funding solution:
Small Business Funding Grants
If you’re willing to put in the time to apply for them, many funding programs for small business offer up small business grants that provide business funding that recipients don’t have to repay.
Of course, these grants from funding programs for small businesses are extremely competitive—you’ll need to have a grant application to score one. That said, there are tons and tons of small business grants out there that you can try your luck with, so it’s certainly worth a shot!
Friends and Family
If you’re fortunate enough to have friends or family members who can invest in your business or lend you money, it’s a great opportunity. Because of your personal relationship, your friends or family members are likely to offer more comfortable terms on an investment agreement than you’d receive from an angel investor, bank, or online alternative lender.
Reaching out to friends and family is high risk, high reward… So make sure you hedge your bets and protect everyone’s interests.
Once you’ve agreed to a loan, write out terms for exactly how the loan will be repaid, in what increments, and over what period of time. If your friend or family member is making an investment in your business, clarify the exact percentage of ownership or profit share that person will take, as well as the role your investor will have in business decisions moving forward.
Even if you don’t involve an attorney, put the terms in writing and have each party sign so there are no questions later on about exactly what was agreed upon.
Small Business Crowdfunding Campaigns
If you’re not familiar with these kinds of funding opportunities for small businesses through platforms like Kickstarter or Indiegogo, here’s the basic idea: You’re getting a large amount of funding from small contributions made by a group of people. Each individual contribution adds up to a bigger total, which amounts to your business funding solution.
You share your vision for what you’ll do with the funds, set a funding goal, then use social media and other marketing avenues to encourage potential donors to support your campaign. Because most crowdfunding platforms work on an “all or nothing” basis—that is, you must reach your funding goal to receive any cash at all—it often works best for those with more modest business funding requirements.
Whether this goal is expanding your restaurant or putting the board game you’ve designed into production, you’ll want to have a tangible result that other people, often total strangers, will be excited to support.
Of course, the challenge of crowdfunding is actually finding willing participants ready to hand over cash toward your business vision. This is where incentives come in. These incentives often come in tiers, depending on how much your donor offers. The more money they spend, the more you give back.
Final Words on Small Business Funding Solutions
Unfortunately, there’s no magic formula to tell you exactly how to fund your business, or when to fund your business, or for how much. The decision you make will ultimately come down to a number of very personal factors.
The good news is that there are more choices than ever for small business owners in need of funding. This information will help you feel more informed and empowered to make the right choice for your business needs, both now and in the future!
No comments:
Post a Comment