So, you have decided to start your own business? You are finally taking the plunge to be your own boss and start your dream career.
But it can be difficult to do so if you do not have the funding secured or you do not know where to start looking for funding.
If you have been researching “where to apply for business funding”, you are well on your way to securing finances for your business. For those who are stumped for financing ideas, read on below for different ways to secure funding for your small business.
- Look for small business lenders
There are many financial lenders which are geared specifically towards small business and SME loans. These companies are a good place to start for small business owners, as you will find the process easy and efficient.
Small business lenders do not have as many clauses as banks or financial institutions have, but you will need to check the terms and conditions of the lender you choose. Small business lenders are often more willing to negotiate interest rates as they understand that business owners are just starting out and might not be able to afford higher interest rates.
- Look into crowdfunding
Crowdfunding is a relatively new innovation of the digital age, with companies such as Slourish, Indiegogo, Kickstarter and others being at the head of the pack. You can investigate crowdfunding as a funding method to help you before you look into more serious ways to fund your business.
Crowdfunding is the perfect platform to finance business equipment or marketing budgets, as it is not considered to be ideal for long-term funding. Once you know where to apply for business funding, you can use the money you raised with crowdfunding to supplement your business loan or update your store. Be sure to include incentives for those who contribute to your crowdfunding campaign, such as a tester of your new product or a discount at your store.
- Inquire about investors
One effective way to secure funding for your small business is to look into investors. If you decide to look into investors, you will need to create a well-written and well-thought-out business plan to show them.
Read everything you can about your industry and your competitors, and include this research in your business plan. You will need to be able to motivate the investor to learn more about your business, as well as educate them on the investment. Remember to clearly define your strategy and how you plan on providing them with a solid return on investment (ROI). You will need to clearly set the guidelines of the investment, as some investors might want more control than others.
If you are looking for investment platforms,this list of p2p investment platforms is available.
- Ask friends and family
While many small business owners do not want to start their business in debt to others, asking friends and family to invest or lend you money is a viable option. But you will need to be sure to have a solid business plan in place first before you even approach someone asking them for a loan or an investment.
In order to make this loan a success, you will need to include an evidence-based assessment of when your family or friends will see their money again as well as formal financial projections. Without these, you might find that your family is reluctant to loan you any money. You will need to be aware that asking for money from friends and family can be risky for both parties involved and you will need to draw up and sign a proper, legally binding contract in order for the loan or investment to be a success.
- Begin with bootstrapping
Bootstrapping might sound like something out of a Pirates of the Caribbean film, but it can be defined as starting a business with very little to no money. You will need to gather together any personal funding you might have, such as savings or selling off equity, and use this to start funding your small business.
Bootstrapping is a good option for those who are starting out and do not want to begin their business in debt, but it is not a sustainable option for the long-term. Bootstrapping might help with the first month’s worth of expenses, but you will need to look into where to apply for business funding before this money runs out. Be sure that any money you put into your business you will get out, with interest, before you consider bootstrapping.
- Be smart about finances
Starting your own business is an exciting time, but it can come with its own set of pitfalls. You will need to draw up a business plan before you apply for finance or ask any investors to put their name behind your product or service. Be sure to include realistic statistics and projections, as these will encourage lenders to approve your loan. The smartest financial decision for small business owners is to opt for a small business loan, as you will find the process easy, efficient and more stable than some other options.
