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7 Ways to Finance Your New Startup

Small-bus-loan-app

7 Ways to Finance Your New Startup

When it comes to starting a new business, one thing that you are always going to need is money, and there are several ways that you can get it. Even the smallest startup will require at least a little bit of financing, and as we all know, it really does take money to make money. So, how do you get the money you need for your startup? Here are the most popular methods.

Ways to Finance Your New Startup

Family and Friends

One of the most common options is to reach out to family members and friends to help you with financing your startup. This may be your best option if you can’t get a bank loan due to poor credit. People who care about you want to see you succeed, and will be more apt to loan you money. In most cases, if there is interest at all, it is at a much lower rate than what the banks and other financial institutions charge.

 

Small Business Administration Loans

The SBA was created by Congress in 1953, and offers a number of guaranty programs. You get the money from your own bank, and it is guaranteed by one of these programs. One of the best things about these loans is that they are often given at lower interest rates than traditional bank loans, and even though times have been rough lately, there has been a significant rise in the amount of loans granted to small businesses.

Small-bus-loan-app

Self-Financing

The first thing to look at is yourself. You may not realize it, but you have many ways that you can finance your startup. A bonus of doing this is that you don’t have any loans to repay later. You can use your personal savings, sell personal assets (real estate, stocks, bonds, heirlooms, etc.), use your credit cards, etc. Another idea is to start a side business to fund the main business. Also, to fund your first business you can sell some of your gadgets on sites like GadgetSalvation or Gazelle. When it comes to self-financing sometimes you need to sacrifice some of your stuff to grow your idea into something valuable.

Venture Capital

You can get money from venture capital firms that will invest in you in exchange for equity in your business. The biggest drawback is that these companies tend to only invest in businesses that are established and can show that they earn profits. But, there is no harm in trying. You may have that great idea that one of these companies has been looking for.

 

Crowdfunding

The Internet is a great place to look for funding for a startup. There are all kinds of crowdfunding sites out there, including Kickstarter, where entrepreneurs can post their appeals for funding. More than $1.6 billion has been raised for over 200,000 different projects, and more than 81,000 of these projects have been successfully funded.

 

Angel Investors

Many people just want to help others, and often they help people by investing in startups. Usually, they do so in exchange for equity in the new business. It is easier to get this type of financing than venture capital, because angel investors are those who are already successful in their industries and want to see others succeed in the same industries.

Peer-to-Peer Loans

When you opt for this type of financing, you post your request on a P2P platform. Some platforms you can use include Lending Club and Prosper. You post how much you need and why you need it, and potential investors will look over your request and decide whether or not to loan you the money you need. Once the loan is funded, you receive the money, and repay the loan as you would a traditional bank loan, and the payments are divided up among the various investors.

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