You had the vision, now all you need are the funds to set the plan in motion. If you are in the process of starting a small business, but are struggling to find adequate funding, you are not alone. To help get your dreams up and running, here are 6 simple ways to fund your startup.
A business loan is a fixed amount of capital offered by a lender in return for predictable, fixed monthly payments. Business loans come with fixed maturity dates that indicate when your loan must be repaid in full. Banks also have various specific criteria that is required to be met before an offer is made. Banks typically require a form of collateral when agreeing to small business loans, but this is not always the case. Despite lending standards that have become stricter, many banks have funds reserved for small business loans.
Merchant Cash Advances
Merchant cash advances are an alternative source of funds for entrepreneurs to help grow their business. Capital is provided upfront by the provider in exchange for a percentage of future credit card sales. Merchant cash advances provide many benefits, from a simplified application process and quick access to capital, to credit protection. Unlike bank loans, merchant cash advances do not require a credit score or collateral.
Used responsibly, a credit card can provide your business with capital quickly. Increasing cash flow allows you to make critical decisions and even extend your accounts payable period. However, while these are all great benefits, using a credit card to fund your business is a risky move. Falling behind on your payment can result in your credit score taking a hit. Therefore, refinancing with a credit card should be reserved for emergency occasions only.
Tapping into your 401(k) is another way to secure funds to start your own business. While this method is not usually recommended, provisions in the tax code allow you to access this money without penalty when followed correctly. Investing your retirement fund in a startup can be a risky financial move, especially if there is no safety net in place for if things do not go as intended. Hiring a professional to walk you through the process can help ensure that everything is done correctly.
Crowdfunding may seem like an unconventional way to fund a business, but this method has become increasingly popular among startups. By setting a project goal and mission statement on recognized crowdsourcing sites, entrepreneurs can raise money from donations made across the world. If done correctly, crowdfunding brings people to their goals in a designated amount of time, making it a reliable source of short-term funding. Goals can be as specific as necessary inventory and appliances to more broad topics, such as securing a larger loan for your business.
Friends and Family
Successful startups require time, energy, money, and most of all, support. Similar to crowdsourcing, turning to your inner circle to share your business ideas can be a great way to kickstart a startup. Support from family and friends can help not only to add additional funds to your business but also to grow your network. Word of mouth is an easy and free way to acquire new customers, so be sure to recruit those close to you as advocates. More exposure and people talking about your business invites potential investors to find you.
Startup Funding by Lendr
Securing funds for a startup business can be exhausting, but it does not have to be. At Lendr, we work hard to provide small businesses startup funding and entrepreneurs with the fast funding they need to grow their businesses. If you are in the process of funding a startup, we encourage you to contact us by calling 855-928-1919 to learn more about our application process today.