Everything You Need To Know About Small Business Funding

Ideas on Small Business Funding

You’ve come up with a great business idea that will surely rake in thousands. You have the marketing planned and the promotions drawn up. You’ve even scouted possible employees and target business venues. Your only problem is: where’s the capital? Clearing the financing hurdle is always difficult for a brand-new business. Startup entrepreneurs’ business loan proposals are all too often turned down and traditional bank loans are tough to secure. To help you, here are a number of small business funding ideas that can get the gears moving.

business funding

Online lending

OnDeck and Kabbage are online lending sites that have been gaining popularity recently. They have become a favorite alternative to traditional business loans. Speed is the main advantage of online lenders. A decision and an accompanying ‘fundscan’ can be issued within just a few days because it takes only about an hour for an application to complete processing. Traditional business loans, on the other hand, can take weeks up to months to process and complete. Give online lending a try, it just might be the right one for you.


Crowdfunding can give a big infusion to your startup finance. Popular site such as Indiegogo and Kickstarter allow startup businesses to accumulate small investments from several of independent investors. Most sites allow establishments to pool money in exchange for products or honorariums.

Be sure to read and understand the fine print before selecting your crowdfunding platform. It’s better to be prepared and know what you’re getting into than be surprised later. Some sites expect businesses to raise the target amount in full before they can use their money. A few will allow you to keep any amount raised. In addition, some site will also claim percentages or require fees.

Credit cards

Your funds may just be sitting inside your wallet all this tome. Business credit cards are one of the most readily-available methods in having your business up and running in just a jiffy. The minimum payment on a business credit card is indeed very low. You can just pay it when you put your funds on a credit card, provided that you don’t have a lot of other expenses to begin with.

This may be an ideal solution, but there are some critical catches to consider before whipping your plastic out. Your credit may suffer if your business start having trouble with keeping up with payments. Interest rates can climb up and build rather swiftly.

Factoring and invoice advances

If you have no wish to make a loan, services like factoring and invoice advancing may be the best for your small business. A service provider will front money for you on invoices that have been billed out. You then pay it back after the customers have settled their bill. These advances will allow companies to shorten the pay gap between the billed work and returns to distributors and contractors. Then, with this shortening, companies will be able to accept new projects more quickly.

Product presales

Another idea is selling your products before they are launched. This is an often-overlooked concept that can be an extremely effective way to raise the financing amount needed. Priska Diaz, an entrepreneur and owner of company Bittylab, raised $50,000 by putting her Bare air-free baby bottles up for presale. The money was used to pay for inventory, and has even helped in retail by learning about the visitors to her site.

Family and friends

An interesting replacement to traditional financing is borrowing from your family and friends. You have another possible way to finance your business plans if you have friends or relatives with some currency to spare. It can have some singular advantages, such as low- to 0-interest credits and avoiding the complexity of bank contracts. Although you have to be careful to arrange for timely payments to avoid harming relationships.

Home equity loan

If you are a homeowner and have an equity—the house’s value minus what you still owe. A home equity loans are very cheap and are a splendid alternative for to gaining funds. These loans usually have low-interest offers that are both generally lower and more flexible than traditional mercantile rates.

The gaping risk, however, is that you are placing your own house on the line. You risk foreclosure should your business go down or if you do not maintain the terms and conditions of the loan.

Selling assets

You may have a way of financing you startup at your fingertips without even realizing it. It may be a tough decision but you have to weigh the pros and cons of letting something go in exchange for a bigger, better possibly. The money can fund something that would go a longer way than say, a car or a piece of property.

Renting your home out

Another creative way for fund you startup is in cutting out liabilities. You can go and rent your assets out, be it your home, apartment or spare car. There tons of cases where small business owners rented their home out which resulted to funding their first few products.


Government funds may be able to help you with your small business especially if it is science-oriented or research-centered one. Although grants tend to be taxing and time-consuming, they are still a good option to explore.

Through the STTR (Small Business Technology Transfer) and the SBIR (Small Business Innovation Research) programs, may be able to apply for a grant from the SBA (Small Business Administration). Recipients of the grants should meet federal research standards, development goals and have a high commercialization potential.

Side businesses

You can try “double-dipping” to fund your business. This is when you direct the revenue earned from one venture to fuel another. You may offer your exclusive services to one job or business while funding your own.

Now comes the time to sit down, review your options and consider the advantages and disadvantages that each present. Go over your plans and decide the amount of financial assistance that you will really need. Trim your budget to the least possible without sacrificing anything essential. Add the nonessentials only when you have the excess funds to finance it. Most of the time, businesses may receive more income than what is actually truly needed, this too must be put to responsible use.

Happy funding!

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