business funding

5 Realistic Ways to Find Funding for Your Small Business

By David Boyar

For many entrepreneurs, securing business funding is one of the most terrifying and difficult parts of the startup process. All businesses need some startup finances to get going, and that is often where the first obstacle emerges. Even for businesses with good track records, loans have been hard to come by. Most small businesses accumulate their funding from a number of different sources. However, no single source of funding is easier to achieve than another. It is all very much dependent on your business model, projections and generally how well you can sell yourself to potential financial partners.

Whether you are seeking startup finances, or already operating your small business and looking for money for business growth, you must remain positive and stay observant in your efforts. Follow these five realistic ways to start funding your small business.

1. Yourself

Entrepreneurs and small business owners often realize that they will initially have to self-fund their projects. They will usually have to do this for a significant amount of time until funding from an alternate source becomes more realistic. There are numerous ways this method is achievable from personal saving accounts, zero interest credit cards, to selling your own personal assets. If you truly believe in your vision then you should feel completely comfortable investing your own money into the business. This is also appealing to potential investors to know you are truly fully invested in your own ideas.

2. Friends and Family

Gaining funding from your family and friends is a very popular and efficient way to collect some initial funds for a business. Quite simply, your friends and family are more likely than anyone to believe in your decisions and visions. It is important to remember that you could be potentially affecting a personal relationship, so ensure you frequently communicate with your friends and family to avoid damaging relationships. You must always remember never to take advantage of those who care for you and borrow just enough to launch the business into operations and build your website. It is important that you, and your family and friends get sound legal advice as this could potentially cost you more in the long run.

3. Credit Cards

Business credit cards are among the most easily available ways to finance a startup business and can be a quick way to get your business started. These cards are an incredibly useful tool for launching and managing the financial aspect for many small businesses. One appealing advantage is that the minimum payment on business credit cards is very low. They allow you to track expenses, manage your cash flow and also provide support for any financial emergencies. If you are a new business, you can put your expenses on the credit card and pay the minimum payment. Before choosing this option you need to also realise the disadvantages, for example, if a new business is started but you do not have the fund to make repayments, the interest rates and costs on the card could built up very quickly and this can ultimately affect your credit rating.

4. Angel Investors

Entrepreneurs looking to finance their business can seek an angel investor. If your business has growth potential then an angel investor might be a source of financing to consider. Angel investors are wealthy business people who are willing you provide funding to promising startups. This type of investing usually occurs in a company’s early stages and investors expect a 20-25% return on their investment which may cut your profits in the short run but be extremely beneficial on a long term basis. Angel investors are likely to have strategic experience and can provide tactical benefit to the companies they are investing in. Their principal advantage is that you generally have a friendlier atmosphere and a quicker decision making outcome for a smaller amount of money.

5. Online Financing Sites

If you cannot qualify for a bank loan it may be worth checking out the number of growing Internet-based financing companies who offer short-term finance payments. Online financing sites have the advantage of speed. The application can take up to an hour to complete and a decision and funds can be issued within days. Online lending is extremely efficient and works fast, you’ll be contacted quickly if your loan is approved or rejected. Although it is worth noticing that these loans are not cheap, your APR can be from the low teens to as high as 100-200%.

How did you fund your business when you first got started?

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David Boyar
David Boyar is passionate about finance, which he demonstrates in his position at Sequel VCFO. His desire to help small to medium businesses reach their financial potential is commendable. David hopes to help those looking to start a new business with his financial wisdom.

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