Raising Capital for a Startup
BY: LUCINDA HONEYCUTT ON TUESDAY, JUNE 06, 2017
Starting a small business is not always the easiest of tasks. It takes passion and commitment to really pull it off. And it takes money. Plenty of it! Very few small business owners are able to magically pull out the cash they need. Most small business owners need help and here are some ways you can raise the capital you need for your startup.
Go the Old-Fashioned Route
The tried and true way to raise capital is to take out a small business loan. Sure, I make it sound easy but it’s really not. It’s just like any other loan process except one thing a lender takes into consideration the viability and sustainability of your business. If you lack either of those, you can find yourself getting denied. A lender wants your business to succeed because they want you to be able to pay the loan off. The upside is that if it’s not a viable and sustainable business, they will tell you why and you can work to tweak your business plan to make it viable and sustainable. Unfortunately, your credit score plays a major factor into the loan as well. You could have the most viable and sustainable business ready to go and your credit score can ruin your chances at getting that much-needed loan. So, make sure you have fixed your credit and your business is viable and sustainable.
Visit Your Local Small Business Administration
Small Business Administration loans are a fantastic tool for the small business owner for so many reasons. Getting small business loans when a bank won’t finance you is something to take into consideration. They also target women and veterans with special loans designed for them. If you cannot get the loan right away, never fear because they offer so many ways to help you build good business credit and get you that loan.
Dig Deep into Your Wallet
So, let’s say that for whatever reason you cannot get a small business loan, or you can’t get one to cover all your needs, then we need to look for creative ways to build capital. Firstly, yes you should look at your own available cash. Savings and retirement accounts can be enough to help you get going. It’s a gamble but the payout can be huge. Especially if you want to attract investors. Investors love entrepreneurs that are flowing their own cash in. If you aren’t, it becomes a big red flag to potential investors.
Crowdfunding is Gold
Crowdfunding has become the top way to raise money for a wide range of reasons. Kickstarter is a popular platform for small businesses looking to get the capital in order to release a product. Peerbackers is another that is designed for innovators and entrepreneurs, no matter what business sector you are involved in. There are so many options available, it doesn’t hurt to look around and compare different crowdfunding options.
Say Yes to a Grant
Depending on the nature of your business, it is possible to find a grant to help you raise capital for your small business. Here is the trick to it. Federal grants are not awarded to individuals to start a new business. Rather, they tend to award grants to non-profit organizations. However, if there is federal grant money earmarked to jump-starting new businesses, they are awarded to state and local governments. Those governments can then set up their own small business grants for individuals. To find out, you can check with your local small business administration.
Grab Some Investors
Another sure-fire way to raise capital is to find investors. This can also be one of the hardest ways to raise capital. If you are offering a B2B solution, your chamber of commerce membership can come in handy for networking with people who can benefit from your service, as well as find people who want to invest in your business. Outside of that, the most popular way to gain investors is to use an online platform. Angel List is one of the leading websites that helps you find people who are looking for a startup that will bring them some great revenue. Outside of that, you can always resort to asking family and friends to invest in your business.
Getting capital can be as easy or as hard as you make it. Don’t be afraid to think outside the box and look for creative ways to share your brand and gather the cash you need.
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