Besides getting customers, the biggest concern for startup owners is often financing. New businesses are strapped for cash and often don’t have the credit or track record needed to be interesting to financiers. They are also those who are the most likely to suffer from cash flow issues early on. However, there are some realistic funding options that most startup owners should consider. Here are some of the best funding options for fledgling startups.
Non-Bank Lenders
Non-bank lenders are often one of the best and only options for a new business to get financing. What differentiates these lenders is that they will usually be ready to look beyond your business’s credit to award loans. Services like AdvancePoint Capital, for instance, prefer to take a more holistic view of your business and its health. They might be more important to your cash reserves, or your bank statements, for instance. These are a good option if you don’t have credit and want to start building it.
Giving Away Equity
This is also an option that you could consider. Giving away part of the ownership in your company can not only get you some financing but some expertise as well. As a matter of fact, you ideally want to give equity to someone who’s going to be a strategic asset to your company as well.
Bootstrapping
Bootstrapping is about using the assets that you already have on hand to finance your startup. This could be anything from retirement accounts to home equity, or savings. You might also use low-interest credit cards. The good thing about this is that using a low-interest card could allow you to improve your credit and make financing easier for you later down the road.
If you’re going to go down that route, first make sure that you have the credit to qualify. Then, find cards with benefits for your business, like cash back or travel rewards if you have to travel a lot.
Grants and Contests
These are two of the most untapped sources of capital for small businesses, and it’s a shame. There are tons of government grants that you could qualify for if you simply took the time to look. For instance, some might offer money to businesses run by members of certain groups, like veterans for instance. Some will be awarded to people coming from impoverished neighborhoods, women, or from different ethnic groups.
You also have contests that are often geared towards fostering entrepreneurship. While you may never be able to get on “Shark Tank”, there are more and more municipalities that are holding their very own versions to help local business owners. You could check for competitions in your area as these will usually be much less competitive and give you a chance to connect with financiers even if you don’t end up winning.
Conclusion
All of these options should be considered if you’re a startup owner looking for financing. Keeping your options open will give you more chances of getting the financing you so desperately need.