Three Funding Options For Your Business Startup

Most startups do end up seeking outside funding. Your social capital — meaning your professional network — and your credit rating can affect your access to outside sources of funding.

Here are three options to start:

There’s nothing better than free money to fund your business. Many banks and financial companies, along with government agencies and nonprofits, offer grants. The trick is to find them.

Most of the time, grant programs are competitive, so you’ll need to develop a solid business plan and market yourself effectively. Grants often require long applications and the process can be time-consuming. And, the grant may come with strings attached.

A small business development center may be a good place to start. Some work with the U.S. Small Business Administration to help startups obtain grants and loans. Business accelerators and incubators may also have funds to grant.

Financing From Banks And Credit Lines

If you can’t find sufficient money in grants, you may be able to borrow. The first step is generally to apply for a business credit card to begin building your company’s credit.

It’s crucial to use the card for business expenses only. Make sure you can pay off your purchases on time every month. Be aware that business credit card companies will often raise your interest rate if you’re even one day late.

The easiest time to obtain a bank loan is if you’ve been in business for three to five years or more. It’s harder for startups to get funding because their businesses haven’t yet built up credit ratings.

You can improve your chances at getting a bank loan by including a copy of your business plan. Regularly update your business plan, including projections for your funding needs, and leave a copy with your banker.

Using Crowdfunding Platforms

Getting investment money from the general public is a real option these days, and some platforms are working to help small business owners.

GoFundMe.org, the platform’s charitable arm, launched a Small Business Relief Initiative this year to address the pandemic. It provides $500 in matching grants to companies that can raise $500 on the crowdfunding platform.

In order to put you and your business in the best position for success, it is important to be aware of the many helpful options that are available.

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