You have a great business idea, method for getting it off the ground, and can’t wait to open your doors. But, like many people who start their own business, you’re wondering how you’re going to get the capital you need to fund your exciting new venture.
If you’re not sure how to get funding for your new business, here are six suggestions that you may not have considered yet:
1. Grants and Loans
With some digging at the federal, state, and local levels, you’ll find that there are a surprising number of government grants that you can apply for. These are grants that are specifically geared towards helping small business get started. A lot of the funding for these grants coms from departments such as the Treasury Department, the USDA, the Department of Commerce, and much more. Here in Lynchburg, we have several grants and low-interest loans that might be helpful.
2. Banks and Commercial Lenders
While some banks can be choosy about what sort of companies they will back or lend to, the consistently make loans to small businesses based on the inventory or accounts receivable. Any loans made for a small business will typically be based on the owner’s personal collateral such as their home equity.
3. The SBA
The SBA makes loans almost exclusively to small businesses. The only catch is that the business owner needs to provide at least one third of the starting capital. The SBA works with banks, usually one that is local to the business owner, and it usually takes no more than a week for funding to get approved.
4. Private Placement
Did you know that most areas have groups of wealthy individuals that serve as small investors for new businesses? These groups occasionally meet to hear proposals and pitches from new business owners. Funds that come from these groups is called “private placement” and is a great source of new small business revenue. If you want to see if such a group exists in your area, check with the Small Business Development Center (SBDC).
5. Venture Capital
If you are starting a business that is dealing in new products or technologies, you may want to look into venture capital. For the most part, venture capitalists shy away from new business, but the exception is often for small businesses that look to stand a good chance of significantly increasing their business value within three years.
6. Business Contests
This route is often overlooked because it can seem foolish or a last ditch effort. But there are a ton of national and regional business competitions that pay out huge sums of money, like our local Community Business Launch Competition here in Lynchburg. Keep an eye out for contests and competitions that cater to your small business.
Investing in a new business can be scary and a lot of hard work, but know that you’re not alone. Around 543,000 new businesses bud in the U.S. each month, and over 50% of the working population works in a small business. Stay inspired, and know that you can reach out to your local economic authority and small business development center anytime for help.