When it comes to securing the funds you need to get your business off the ground, here are your (many) options.
If you’re seeking money for a startup, you’ve probably asked yourself the same question that every lender you approach is going to ask – why should they give you money? Perhaps even more importantly, how can you find the right lenders?
When it comes to you need to get your business off the ground (if you’re not boot-strapping it, that is), there are so many options that it can be difficult to decide where to start. Each possible lendor comes with their own requirements, perks and drawbacks.
Here are a few funding opportunities to consider and why they could be right for you:
This is the traditional starting place for most new . It’s not a bad choice if you have excellent personal credit, as well as the credentials to make your business a success.
Even so, do your homework to find a lending institution that has a good track record of providing loans for the type or size of business you’re starting. And you’ll want to find a banker who is on your side, one that’s willing to fight on your behalf (and give you helpful hints) if you don’t immediately qualify for a loan.
If you strike out with the banks, consider looking closer to home. Family and friends have a vested interest in seeing you succeed, so they may be willing to bet on you with their checkbooks.
Of course, some people don’t like to mix business and pleasure because it has the potential to destroy personal relationships, but if you vow to pay back by hook or by crook, there’s no reason you shouldn’t let your loved ones help you to realize your professional pursuits. They’re also bound to be more lenient than other lenders.
Small business grants
Grants are available at many levels; they could come from the federal or state government, other businesses or private funding. Find options by checking or the website, which offers both grants and loans. Or approach your city Chamber of Commerce to ask about grants for small business startups like yours. But you may find more money available through private grants that come from other businesses or individuals looking to support startups as a way to encourage innovation and entrepreneurship in specific industries.
You might not like the idea of taking on a partner as a way to secure funding, but if you find the right person, the situation could turn out to be a real boon, especially if you’re more of an “idea” person than a number-cruncher.
The trick is to find someone whose personality, skills and experience complement yours. If the two of you are at odds from the get-go, no amount of money is going to make the situation a successful one.
Some entrepreneurs think venture capital is the only way to get real money for an expensive operation, but the truth is that these types of firms are not usually a good fit for startups. Often they seek businesses that are already successful in order to take them to the next level through expansion, and they usually wrest a lot of control away from you in the process.
This is all wrong for your type of business. Angel investors, however, may offer a better solution. These people are in the business of providing both money and mentorship to local startups in their industry as a way to give back to the community. They’ll offer you not only funding for your startup, but also a guiding hand that comes with many years of experience. If you can find such an angel in your own community, do not hesitate to reach out for help.
is a contributing writer for Purchase Order Financing, where you can find information on and learn more about how the financing process works.