Funding Options for your Startup
You’ve got the idea, you’ve got the drive, now all you need is the cash for your startup. There are multiple financing options for small businesses, and here are a few pointers to help you determine which may be the best route for your specific project:
Apply for a grant
Depending on what type of business you plan on operating, there could be a grant out there for you via a private foundation, group, or even the government. Grants are the best of all worlds; they’re basically free money. It’s an endowment to further your company’s mission. There is no burden of having to pay it back. However, it can be difficult to obtain a grant, and there is generally a long application process that involves essays and proposals as to why your startup deserves the funding. There are grants available for many different types of entrepreneurs, such as women, single parents, minorities, and other demographics. The US Small Business Administration website has a Loans and Grants search tool you can use in order to locate grants.
Why not have the general public fund your project? Crowdfunding is one of those most exciting fundraising innovations in recent years. In what other situation can you ask millions of people to donate to your project? There are websites such as Kickstarter, where entrepreneurs can get attention from investors by posting their projects and ideas online, often with incentives for investors. The downside? With the explosion of crowdfunding popularity, it can be easy to go unnoticed in the vast sea of projects and remain unfunded.
The good old-fashioned business loan
Go to your local bank and discuss the prospect of obtaining a business loan. To get the most accurate information about how to get a loan for your small business, have as much financial information available as possible, as well as a detailed plan for how and where the money will be used, and a business plan available as well. You can obtain a loan on a federal, state, or local level, from a variety of places including economic development agencies, certain nonprofit organizations, banks, and credit unions. If you’re looking for a business loan from the bank, you’ll have a better chance of obtaining a loan if your business already has a bank account there. In order to do that you will have had to file your business with the secretary of state in your home state and obtained an Employer Identification Number (EIN) from the IRS.