If you would like to know how you can raise capital for your business, you are most definitely not alone. In 2019, more than 73% of small companies used some kind of financing, for instance, credit funding. While money does not grow on trees, there are numerous different ways through which you can raise capital for your business, some of which are more traditional than others.
Bootstrap Your Business
As long as your business is not operating in an industry that requires a lot of startup capital, for instance, manufacturing or transport, you can fund your own venture, and it might be so much more feasible than you think. For example, even if you do not have enough savings using which you can run the operation, you can get a 0% low-interest APR business credit card, providing you the chance to borrow cash for some time without incurring any interest.
Maybe you believe that funding a business yourself, carries with itself a lot of risks. And it most surely does. However, it is also very important to consider your potential. If you believe in the vision you have and have an absolute rebuff to accept failure as a choice, you should feel extremely comfortable investing your finances into your business. Investing some of your savings is mostly going to make investors, along with lenders more willing to partner with you in the future.
Launch a Crowd Funding Campaign
There are many crowd funding success stories out there. With the correct product alongside the pitch, you can successfully be one of them. For example, in the year 2013, a designer of affordable 3D printers raised almost $3 million through Kickstarter. This capital helped the business scale its operations and achieve its goal of manufacturing 3D printers for the masses. Eventually, this 3D printer caught the attention of startup capitalists. During the series ‘A’ round, Formlabs closed at $19 million in investment, offering them the chance to use which they can expand well beyond the initial goal.
Crowd funding offers business owners the opportunity to connect with like-minded individuals who you would not usually be able to engage with. You can measure interest in your product and understand what is resonating with the consumers and what is not. This helps you understand how you can improve your product as well as your pitch. More importantly, crowd funding can help you raise money to fund your business.
Apply For a Loan
Even as technology leads to new ways of raising capital, traditional financing methods remain the primary way through which small businesses can fund their operations. As per the Small Business Administration (SBA), more than 75% of financing for new businesses comes from business loans, credit cards, and other lines of credit, for instance, fast cash loans online. Speaking in general, small business loans that have the most promising rates and terms are going to be SBA loans and term loans taken from banks or any other financial institutions.
- To get approved for these loans, you mostly need to meet requirements such as the following:
- You should have been in business for at least two years or more.
- The business has a substantial annual revenues (usually no less than $100,000)
- Good credit (for instance a score of 640+)
These are not hard and fast rules and are going to differ depending on the lender. If you do not qualify for a term loan along with a reasonable APR, there are numerous other, albeit more expensive, kinds of funding available. If you have outstanding invoices, you could go for invoice financing to get that money quickly. Or, if you require cash for machinery, technical devices, office equipment, or something comparable, consider equipment financing