Sep 23 2017

11 Sources of Funding for Your Small Business, small business funding opportunities.#Small #business #funding #opportunities


11 Sources of Funding for Your Small Business

Small business funding opportunities

When you’ve got a big new idea that you want to get off the ground or an existing operation that requires an influx of capital to keep charging ahead, you want money fast. And that puts you at risk of paying unnecessarily high interest rates for the first lending option you encounter or wasting time with unnecessarily slow approval processes that may even end in rejection. Thankfully, there are myriad financing options for small businesses if you know where to look.

We’ve put together a list of sources of capital for small businesses, ranging from conventional bank loans to newer options such as online lenders and crowdfunding portals. Your funding needs will depend on whether you’re launching a new venture or expanding an existing one. Each funding option has its particular pros and cons, which you should weigh carefully to get the best choice for your needs.

Here are 11 sources of funding available to small businesses at different stages of growth. We’ve arranged them in order of ease of qualifying.

By Rodrigo Sermeño, Reporter Small business funding opportunities | October 2016

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11 Sources of Funding for Your Small Business

Friends and Family

Small business funding opportunities

Interest rate: Set by lender and borrower

It isn’t easy getting a bank loan when you are just starting out. For example, many banks require strong credit scores and a personal guarantee.

Many early-stage businesses tap friends and family for easy funding. Companies such as LendingKarma and LoanBack help entrepreneurs to formalize and manage the process of soliciting loans from your social network. For a small fee, starting around $30, your business and your sources of seed money can securely exchange money through an online platform, utilizing features like payment tracking and e-mail reminders to ensure that lenders get paid back on time.

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11 Sources of Funding for Your Small Business

Credit Cards

Small business funding opportunities

Using personal credit cards is another option for people starting businesses, particularly if they have good credit.

If you’re thinking of going this route, make the most of credit cards with different features for different expenses. For example, a credit card with a low interest rate, preferably a 0% introductory offer, could be used for business purchases. For large cash expenditures, use your card with no fees for cash advances, then transfer the balance to the card with the 0% interest rate.

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11 Sources of Funding for Your Small Business


Small business funding opportunities

Interest rate: N/A (payback in form of equity or rewards)

Popularized by platforms such as Indiegogo and Kickstarter, crowdfunding has evolved in the last couple of years into a viable funding alternative for those looking to start a business. Crowdfunding is a great option for entrepreneurs who may not have an established track record, but who can successfully demonstrate the viability of their venture or product to potential backers.

There are two main types of crowdfunding: reward- and equity-based. Reward crowdfunding allows entrepreneurs to receive financing by offering, say, a future product in return for capital. Equity crowdfunding allows entrepreneurs to reach investors interested in owning a piece of their start-ups.

Platforms such as SeedInvest and Crowdfunder allow you to offer equity to a pool of investors. Indiegogo and Kickstarter allow you to raise money from a pool of backers in exchange for a reward.

“Crowdfunding is an option that doesn’t look at your personal financial information at all and could provide cash for your business, particularly if it looks attractive but hasn’t hit the point where it is generating a lot of revenue,” says Gerri Detweiler, head of market education at Nav, a California-based company that helps entrepreneurs manage their business credit.

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