Deciding to start a business is really exciting but that’s the easy part. Figuring out how to finance your small business is another story. Many entrepreneurs never see their idea become reality because they fail to acquire funding. Lack of funds, however, should not deter you from pursuing your entrepreneurial dreams.
Whether you're an experienced entrepreneur or just getting started, your main goal is to grow your company, and funding is an essential part of the process. Fortunately, there are many ways to get funds and a small business loan could be one of them. Keep reading to discover a few ways to fund your small business and get an idea of how to get seed funding.
Small Business Loans
Benefits of Small Business Loans
A business loan can really benefit a business when they need it the most. Whether you’re looking to expand as your small business grows, buy new equipment, purchase inventory, or hire more employees, a business loan is an excellent solution.How do they work?
Business loans are offered by lenders. They usually help you understand your funding options and guide you to select the small business loan that is the best fit for you and your business.You just need to answer a few simple questions about your small business in an online application and they will analyse what business loan is the best fit for you.
Disadvantages of Small Business Loans
You could be paying interest on funds you're not using, that’s why it's important to come up with a financial plan to use that money wisely and generate new income.Other Common Sources of Funding for a Small Business
Crowdfunding
It’s becoming a popular way to raise money for everything from startups and small businesses. You can use the money to launch a product, fund a project, or grow your small business.There's an entire list of crowdfunding sites where people can invest in your project, idea or business and here are some of them:
Some of the pros of crowdfunding are:
If you are planning to use a funding portal such as Kickstarter, you can concentrate all of your investor communication into a single place.- You can raise a lot of money.
- It’s a great way to test your product in the market.
- There's not much financial risk.
- Some of the cons of crowdfunding are:
- It takes time and money to create promotional videos, publish the project, and market it all effectively.
- Less than one-third of all crowdfunding campaigns achieve their goals.
- It’s a crowded market.
Savings
According to Hitachi Capital Business Finance, 39% of startups have raided their personal finances to keep their business afloat. However, using your personal savings in your business is not a good idea.Some of the pros are that you have complete control of your investment and you will be able to decide how the money will be used. Some of the cons are that you may not have enough money left over to cover other expenses of your personal life.
