Are you thinking about starting up your own small business? Maybe you have aspirations to start the next big fashion brand or tech company. Whatever you hope to achieve from your business, you’ll be able to do this with the right financial investment.
But where do you start when it comes to funding a business? Some people turn to private investors, while others take out loans. Whichever route you take, you’ll need to know which option suits your needs best.
To help you learn how to fund a business, we compiled some of the most popular options.
In this article, we’ll explore getting small business loans to fund a business.
Take Out a Startup Loan
There are plenty of different types of business loans out there, from SBA loans to conventional bank loans.
Small Business Administration (SBA) loans are one of the most common funding options for a startup business. Generally speaking, you will need to have been in business for at least two years before you can qualify for this type of loan.
There are two types of loans on offer; microloan, and Community Advantage Loans. The loans are not made by the SBA- they do, however, guarantee them.
The microloan program has loans of up to $50,000- however, the average loan is $13,000. You’ll need to find a microlender in your area to see whether you qualify.
A Community Advantage Loan is federally guaranteed. The program was launched a decade ago and is designed to give underserved communities better access to funding.
Requirements will vary depending on the lender- you’ll just need to prove that you’re responsible and that your business will make money.
For more information on this type of funding check out business loans Nav.
An option for finding business funding that is growing with popularity is crowdfunding. Using platforms such as Kickstarter or GoFundMe, you can raise funds from individuals who are willing to invest small amounts.
It may sound like quite a niche way of funding your business, but tech giants such as Occulus have successfully launched using crowdfunding.
Set yourself a goal, sell your idea, and watch the money roll in to help you get off the ground.
Borrow Money From Friends and Family
Another option would be to go and ask friends and family if they are willing to invest in your project. You may be reticent to do this if you are concerned about the financial risks that you’ll be putting your family and friends in.
Make sure that you treat borrowing from friends and family in the same way that you would a professional investor. Set up a meeting and pitch your ideas. Then, offer shares for your business in exchange for financial investment.
Try asking several different people for support. By borrowing smaller amounts from different people, you’ll be spreading the risk thus minimizing it.
How to Fund a Business
If you’re struggling to know how to fund a business, there are plenty of great ways of going about this. From Small Business Administration to crowdfunding campaigns, you could set your dreams in motion.
For more great articles on a range of business topics, check out the rest of the site.