Getting funding for your start-up business can be one of the most challenging first steps that you can go through, but it is also a necessary step to get a business up and running. Having a great business plan and a strong work ethic may not be enough to convince a lender to provide you with the funds will need. These days, banks almost never lend to entrepreneurs who are starting a business, so this is why it is important that you look at multiple sources of financing and be open to all options.
An angel investor is a single individual who is willing to invest in a company using his or her own resources. This is usually done in exchange for partial ownership or equity in the company. If you’re lucky enough to find a generous angel investor for your start up, make sure you understand his or her expectations regarding equity in your company.
Online Small Business Loans
Banks may not be willing to lend to start-up business entrepreneurs, but there are many online lenders who may be willing to provide you with online small business loans. If your business is up and running and generating revenue, but you need working capital to take your business to the next level, then online lenders like OnDeck.com and Kabbage.com may be a good source of funding for you. They can provide you with $2,000 to $500,000 in funds, and you can have access to these funds as soon as one business day in many cases.
Crowdfunding and Peer-to-Peer Lending
If you do not mind giving up a little equity in your business, then crowdfunding may be a good source of funds for you. When you make a funding request on sites like Crowdfunder.com or CircleUp.com, investors make small contributions and in return, they are given an equity stake in your business. Peer-to-peer lending is similar to crowdfunding, but instead of giving up equity in your business, you are charged an interest rate that can be as high as 29.9 percent.
There are many other ways that you can get funds for your start-up business. An angel investor, credit cards, getting a home equity loan, getting cash out of a life insurance policy, or working extra hours at your regular job are all good sources of funds. Be creative in your search for funding and stay determined to see your business grow.