Starting up a business can be tricky without knowing how you’re going to fund it. Here are 5 different business financing options for new entrepreneurs.
There are 28.8 million small businesses in the United States, a number that grows every month. So if you’ve dreamed of owning your own businesses, you should know it’s an accomplishment that millions of other people have reached.
But how do these small businesses get the funding to even launch in the first place? Starting a business takes a lot of money that most people don’t have. But there are a few different ways you can get the funding you need.
Read on to learn about 5 business financing options that you can consider for your small business.
Bootstrapping
The most responsible way to fund your small business is by funding it yourself, with your own money. This is a big risk because it often means dedicating your life’s savings to your small business, which may or may not succeed.
However, if you feel confident in your business and have the money to start it, this is a great option. You won’t have to worry about paying back a debt or sharing profits with other stakeholders.
Friends and Family
Many people may feel too proud to ask their friends or family for money, but this may be a better option than taking out a loan. If you start a GoFundMe so you can have friends and family donate to help you launch your business.
If you have family with a lot of money, you could see if they’re willing to invest in your company or give you a loan. Borrowing money from family is a better option than borrowing from the bank because of nasty interest rates.
Just make sure you pay them back or else Thanksgiving might get really awkward.
Take Out a Small Business Loan
The most common way to fun a small business is by taking out a small business loan. This is often done through a bank.
Small business loans are a great way to fund your business if you can’t fund it yourself or get help from family or investors. You’ll have to pay the loan back with interest, so make try to get a good loan that won’t put you deep in the hole. Use this calculator to better understand your business loans.
Angel Investors
If you’re willing to give up some equity in your business, you can look for angel investors to help fund your startup.
An angel investor will give some of their own money to fund your small business, and in return will own part of your company. They hope that down the line your company will be successful and their investment will pay off.
Crowdfunding
If you have a small business idea that you think other people will be excited about, crowdfunding is a great way to fund your business. You can use sites like Kickstarter to get donations from people who like your business idea.
The more you can spread the word about your business, the better this option will be for you. If no one knows about your idea, you won’t get enough funding to start your business.
Business Financing Options: Wrapping Up
There are several great business financing options to choose from, so there’s no reason to put off starting your business any longer.
Check out some of our other entrepreneurial blogs for great tips for running a successful business.
