10 Ways To Fund Your Small Business HEADER

10 Ways To Fund Your Small Business

Starting your own business is an exciting journey. If you’re getting ready to take your idea, product or service to market you may find that it takes a surprising amount of time, effort and of course money to make it happen.

So, you have put together your business plan and you’re ready to dive into the world of entrepreneurship? It is likely then, that your next step will need to be figuring out how to secure the capital to register, launch. and set up the company infrastructure to get going.

Many– if not most– people do not have the savings or capital injection needed to get their dream business off the ground (even if it is not always a big investment that is needed). 

If you’re considering your funding options, you may want to consider the following possibilities:   

1. Flexible small business loan

A flexible small business loan is a funding option designed for the small and medium enterprise (SME). You can usually apply online, discuss your specific needs with a relationship manager to negotiate a loan and agree to a viable repayment plan that works for your projected business plan.

2. EU Funding

EU funding is available for all types of companies of any size and sector including entrepreneurs, start-ups, micro companies, small and medium-sized enterprises.

You can consider a wide range of financing options including business loans, microfinancing, guarantees on traditional loans  and venture capital.

It is important to remember that the decision to provide EU financing will be made by the local financial institutions such as banks, venture capitalists or angel investors.

3. Venture capital (VC)

If you are an innovative and growth-oriented small business, you may want to consider acquiring capital through equity investment.

Venture capital investment may be the preferred route for you should you wish to expand, break into new markets, and grow faster.

It is key to have a solid and sound business record or plan that showcases the potential for rapid growth. VC’s are also interested in having a voice in the direction of the company.

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4. Startup pitch competitions

If you believe your business has the ‘edge’ factor to stand out amongst other startups and innovators, then why not take your shot at every opportunity to enter into startup pitch competitions.

Even if you do not win, you may find your business idea attracts the attention of another potential investor. You can meet other founders who you can work with in future.   Plus, this is a great way to work and develop on your pitching skills!

5. Crowdfunding

There are a small number of good crowdfunding platforms proving popular with inventors, entrepreneurs and the public.

You can take a look at platforms like Kickstarter, Indiegogo, RocketHub, Fundable and Fundly to find the right fit for you.

6. Angel investors

Angel investors are always looking for the next business to invest in. In fact some of the world’s biggest tech companies, like Google and Yahoo, were funded by angel investors.

Receiving investment from an ‘Angel’ will almost always mean that you give the investor a share of equity in your company.  Important to remember is that Angel investors and any related transactions must be registered with the Securities and Exchange Commission (SEC).

7. Microloans

Microloans are granted by institutions to individuals who would not normally qualify for a traditional bank loan. Microloan organizations allow individuals to invest in economic opportunities and are gaining popularity in small and developing nations too.

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8. Personal financing

Starting a business is considered a risk and this level of risk is often what keeps traditional lenders from granting loans to aspiring entrepreneurs.

This can be even more challenging if the startup owner hasn’t invested any of his or her own money. If you have savings or own your home and are willing to refinance or take out a second mortgage, then these are options you can also explore, but only if you’re comfortable with the potentially bad consequences.

9. Purchase order financing

A business’ cash flow can be affected for a few reasons, including seasonality as well as supply and demand. If you’re in this boat then purchase order financing might be your answer.

How it works is that a purchase order financing company will give your business an advance so that you can purchase the materials you need today and they will then collect back the money once the goods are sold.

Qualifying companies for purchase order financing are those that fall into the field of manufactured goods, not services,  and those that stand to make a margin of 20% or more on the sale.

10.  Borrowing from friends and family

Your friends or family members might have a personal interest in helping you fund your business, especially in the beginning. 

However, taking money from friends and family can also be complicated, and it is key that you consider all the pros and cons before going this route to generate funds.

Managing your money as a startup is really important and a critical part to the success of your business. Join the collaboration Velvet Platform designed with collaborators, freelancers, start-ups, organisers and project managers in mind.

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