Around 550,000 people become entrepreneurs each month in the United States. And 77% of them finance their small businesses from personal funds. Bank loans are the next most popular way that entrepreneurs secure funding for their businesses.
But what if you don’t have the personal funds to invest in your startup? Are there any other options? Yes, there are!
Read on for a list of 7 ways you can find funding for your new business.
1. Small Business Grants
One of the best ways to secure funding for your business idea is to get a grant. Unlike a loan, you don’t need to repay a grant.
There are both federal, local and corporate grants that help new businesses acquire financing.
Federal grants are often doled out to state and local governments who then distribute the money to small businesses that apply and meet the criteria.
Local business grants can be offered by nonprofits or your local city. These grants are often for less money than the federal grants, but they are also less competitive.
If your business will serve your local community in some way, you have a good chance of securing a local grant. There are also federal and local grants that target a specific initiative.
If your business will promote environmental change, promote health, or improve technology, you can find a grant that tailors to that specific area.
2. Enter Contests
No, we don’t mean enter contests to win a trip for four to Punta Cana. There are a host of small business contests out there.
Just check to see if you are eligible before you apply.
Again, this is a great way to secure funding that you won’t need to pay back.
It can be hard to learn how to get funding for startups, especially when you don’t have a business credit history. If you need to get your business on track and start growing, you can opt for alternative business loans.
Microloans are a great way to acquire financing because they are usually easier to qualify for than larger bank loans. Microloans are often less than $50,000.
Best of all, you can be approved in as little as 24 hours after you apply. Visit this company to learn more about business loans.
You can also contact your local credit union.
Unlike banks, credit unions are non-profit organizations that are interested in helping local businesses succeed. Each credit union is a member-owned financial cooperative. It operates on the principle of people helping people.
You may get better interest rates, repayment terms and a larger loan here than if you go to a traditional bank. But you do need to be a member of the credit union to be considered for a loan.
Become a member and see if a credit union is a good fit for you.
There are various crowdfunding websites that you can use to secure funding for your business.
Crowdfunding is one of the most popular ways you can find on how to raise money for a business.
You just pitch your idea or product and wait for people to donate. In exchange for their support, you offer freebies, coupons, and other rewards.
Note that most crowdfunding platforms take a small bit of your money as payment, so make sure to read the fine print.
You may be surprised at the overwhelming support you get. Then all you have to do is make sure you plan a successful product launch.
5. SBA Loans
The Small Business Administration can help you find funding for your business even if you don’t qualify for a federal grant.
The best thing about SBA loans is that they are guaranteed by the federal government. You can connect with your local bank to see if they provide SBA loans.
6. Trade For What You Need
Sometimes, what you need for your new business is goods or services, not funds. In these cases, you can barter with other businesses for what you need.
If you need office space, you can provide free IT support for the tenants. Or you can offer equity in exchange for legal or accounting support.
Many small businesses are willing to think outside the box. Find one and set up a mutually beneficial trade.
7. Look For Angel Investor Groups
If you have a tech startup, you will likely need to secure more funds than what you can get from crowdsourcing. You’ll need to find investors that are interested in your business idea.
A good place to start is with angel investors.
Angel investors are individuals with a high net-worth that are interested in supporting startups. Maybe they are successful entrepreneurs or successful businessmen and women.
Generally, an angel investor will invest anywhere from $10,000 to a few million dollars in an upcoming business. You can find angel investors on online platforms such as Gust or through local networking in your industry. You can also look at the Angel Capital Association.
Or, head over to the website AngelList. This site is dedicated to helping entrepreneurs connect with viable investors.
Also, besides making loans, angel investor groups will on occasion host events to help entrepreneurs expand their network. They sometimes run contests and offer other resources to help startups get going.
Check your local community for these groups.
Final Thoughts on How to Find Funding for Your New Business Idea
Thanks for reading. We hope these 7 ways that you can find funding for your startup have helped you. Remember, where there’s a will, there’s a way.
Though it may take time and persistence, if you have the drive, you can secure funding and launch your new business.
Next, check out these facts on the psychology of business to help you grow.