How to Get Funding for Your Small Business

Experienced entrepreneurs already know that there are multiple choices when it comes to funding a small business. It’s not only because different types of businesses require specific funding approaches, but also because funding options have their own requirements and offer varying amounts of money.

Before we introduce the four most frequent types of funding options for a small business, we’ll remind you that you’ll need to predict your costs first. Not only will that help you create your financial plan, it will also adjust your expectations. This, in turn, will enable you to navigate the many funding options available.

If none of the following funding solutions seems like an option for you, you can attempt crypto mining to secure some initial funds first. Bitcoin and other cryptocurrencies hit record highs in 2021, so mining them is just about the only way to get some without serious capital to invest in trading.

Loans

Loans are the most common option for funding your small business. There are different types of loans, including those designed for small businesses only. Generally, there are two places where you can apply for a loan: Banks and credit unions, and online lenders. While there are dozens of lenders and peer-to-peer platforms that offer small-business loans, banks are a more reliable option when it comes to borrowing, even if they are less flexible. Due to high competition, online lenders have borrowing requirements that are easier to meet. Nonetheless, go to your local bank or credit union before applying for a loan at an online lender. It’s always better to talk face-to-face with a real person and discuss the possibilities.

Grants

Another popular option to fund your small business is to look for a grant. Although grants are often quite challenging to acquire, you shouldn’t give up. Many government programs offer grants, and each of them has specific eligibility criteria.  

One of the most popular grants is offered by the National Association for the Self-Employed. At this association, you can apply for a grant worth up to $4,000. You need to use the money for hiring workers, marketing, advertising, opening new business facilities, and more.

Plenty of foundations give small business grants, including the National Institute of Health Funding, the Amber Grant, the Small Business Innovation Research Program, and many others. You just have to make sure you’re eligible first.

Crowdfunding

You probably already know how crowdfunding works. You need to create a campaign, introduce your business project, set a goal, and wait for donations. However, there are differences between crowdfunding sites that you should be familiar with before starting the campaign.

Kickstarter was among the first crowdfunding sites, and it launched in 2009. It is one of the most popular crowdfunding platforms too. The company has already raised over $6.2 billion in funding for various projects around the world. Creating a project on Kickstarter isn’t complicated, but you need to know how fundraising goes before you do that. Namely, if your campaign doesn’t reach the set fundraising goal, the money goes back to the donors, and you won’t get anything.

IndieGoGo is another popular crowdfunding site with different fundraising goal requirements. There is a fee structure to follow. If you don’t hit the goal, you still can get the amount of money you collected, minus the percentage that goes to the platform.

Angel Investment

The next option for funding your small business is angel investment. Angel investment is sometimes mixed up with venture capital, but the two types of funding are entirely different. Put simply, an angel investor is an individual or a group of people ready to support your startup expansion in exchange for a share of your business. Venture capital investment has a much stricter and metric-oriented process. Angel investors invest in startups more often than venture capitalists, as the latter are rarely willing to take the considerable risk that comes with backing a fledgling company.

One of the main benefits of this type of financial support is that you don’t need to risk getting a loan that you need to pay off eventually. Although angel investment seems like the most attractive option for funding a small business, many business owners aren’t ready to relinquish ownership of a part of their company for the money.