With the start of a new year comes new business ideas, opportunities, and goals. But reaching new milestones in your business requires financial support. The best way to jumpstart your latest business ambition is by getting funding to back it up. There are several ways to get funding for your business, some of which we’ve highlighted below.
The Small Business Association (SBA) helps American businesses owners find funding to help start and grow their companies. With SBA loans, small businesses are able to preserve additional cash for operating purposes since the SBA generally requires less money down on a project. They also offer longer terms and amortizations than conventional lending options, which allows business owners to keep more cash on hand.
If your business meets the requirements for a loan, which a vast majority do, then applying for an SBA loan is simple. First, you have to fill out an SBA Lender Match form. This form takes as little as 5 minutes to complete. About two days after applying, you will receive an email with a list of matched vendors. You then can choose from an SBA-approved vendor from this list and submit an application directly with the vendor.
SBA Lending is made even easier for small businesses banking with Grasshopper thanks to Grasshopper’s experienced team of SBA leaders. Get connected with these professionals today to kickstart your financing process.
Venture Capital Investors
Funding can come from investors in the form of venture capital investments. Venture capital typically focuses on high-growth companies and has a longer investment horizon than traditional financing.
These kinds of investments are different from loans. In exchange for venture capital, investors gain an ownership share and active role in the company. Almost all venture capitalists will, at a minimum, want a seat on your board of directors. If you go to these investors for funding you should be prepared to give up a portion of control over your company in exchange for the funding you receive.
There’s no guaranteed way to get venture capital, but the process generally follows these basic steps:
- Finding an investor: When looking for an investor, you need to make sure you’re doing your research to find the right investor for you. Make sure that the investor is reputable and has experience working with companies similar to yours.
- Sharing a business plan: Investors will want to review your business plan to make sure it fits their investment criteria.
- Working out terms: If they want to invest with you, investors will then want to work out a term sheet outlining the specific terms and conditions of the investment.
- Investing: Once the term sheet is agreed upon, you’re ready for the investment!
Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites such as GoFundMe or Kickstarter to bring investors and entrepreneurs together, with the potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives, and venture capitalists.
The most obvious advantage of crowdfunding for a start-up company or individual is its ability to provide access to a larger and more diverse group of investors/supporters. With the ubiquity of social media, crowdfunding platforms are an incredible way for businesses and individuals to both grow their audience and receive the funding they need.
Crowdfunding is also popular because it’s very low risk for business owners. Not only do you get to retain full control of your company, but if your plan fails, you’re typically under no obligation to repay your crowdfunders. Every crowdfunding platform is different, so make sure to read the fine print and understand your full financial and legal obligations.