Whatever kind of business you might be thinking of running, having some kind of understanding of the best possible ways to fund it can be a really important and even essential thing at the very start. Funding comes in many different forms, and because of that, you need to know about the different kinds so that you can effectively compare between them as well as possible. In this post, we’re going to help you with that by looking specifically at some of the surest and safest ways you can possibly fund a business. With these in mind, you should be able to fund your business a lot more easily.
Traditional Loan Types
One of the first ways of funding a business that you are certainly going to want to think about is the traditional loan. In fact, there are many kinds of traditional loans that you might want to consider making use of, so it’s important to be aware of that too. Let’s take a look at some of the most common types of traditional loans so that you can easily compare them as you are trying to get your business started.
- SBA Loans. These loans, otherwise known as Small Business Administration loans, are usually one of the first places that an entrepreneur will look to as they are trying to fund their business. However, you will need to make sure that you fit the right criteria, which can be more troublesome and difficult than you might think. You should look online first to see whether you are likely to qualify.
- Bank Loans might be what people think of when they are first thinking of funding for a business. After all, it fits the traditional image of a business owner going to a bank manager to discuss a potential loan. These days, you won’t find yourself going in person to speak to someone at the bank, as it will all be done online, but it is possible to find a real person to talk to if you prefer – and it is often a good way to get what you need.
- Small Business Lending Fund. This is actually a government fund that will provide your small business with financial help, and you can check out what its current status and likely amount is by looking at the treasury website.
Those are some of the best and safest traditional loan types out there, and each of them are worth considering in their turn.
As well as loans, another attractive option is to look into grants. The main benefit of grants compared to loans is that you won’t often have to pay back what you claim, whereas of course with a loan you are always paying it back at some point or another. Because they are so attractive and competitive, grants can be harder to acquire than loans, but you should still put all of your spare effort into trying to get whatever grants you can for your business. You’ll find that it can be a really powerful way to gain the necessary funding.
When you are on the lookout for grants, make sure that you fit into the specified criteria, so that you don’t waste time applying for a grant you are unlikely to succeed in getting. You should also be prepared to put quite a lot of time into writing the grant application – or even hire a professional grant writer to do it for you, if you want to maximize your chances.
Grants can get quite considerable, so it is definitely worth thinking about them as a potential way to boost your business’ funds at any point in its lifespan.
Of course, if you have personal capital to spare, that is always going to be an option that you might want to consider too, not least because it might allow you to get going quicker without having to fill out grant applications and so forth first. Also, you won’t be in debt to anyone, which is always a huge plus to start out with in any business. On the downside, it’s your money – and if you lose it and the business fails, then that’s that, it won’t be replaced.
There are many kinds of personal capital that you might be able to use in this way. You might have money left over from winning a case of estate litigation, or you might have a lot of money in savings that you are happy to put into the company. You might also have some money from another business that you want to put into the new one, but make sure that you are doing so in a legal and above-board manner.
All in all, personal capital can be a good option, but you have to take care so as not to be burned.
Friends & Family
On the other hand, if you happen to know people who might give you some money, then that can be one way to do it too. There are all sorts of issues to be aware of here – for instance, you don’t want a business to get in the way of a trusted friendship. But if you are keen to get your business going and you know there is someone who might happily help you, then it’s definitely an option to at least consider. And it can be one of the best and safest means of funding a business that there are.
If you do go down this route, consider bringing that individual in as an investor. That means giving them a share of the future profits of the company. That can be a good way to repay them – whether or not you actually repay the money itself as well.
As you can see, there are a lot of options that you can consider if you are keen to fund your business right. Just make sure that you are aware of the many implications of each and that you are doing all you can to make it work.