Starting a new business has never been easy. The risk of failure is high, and the amount of money needed to get it off the ground is even higher. Having said that, some 28 million businesses are born each year in the U.S., according to the Small Business Administration (SBA), each with high hopes of becoming the next best thing.
So, if you have an idea for a great new business, how do you go about getting the cash you need to get it started? The good news is you don’t necessarily need to have a lot of your own funds to do it. Read on to discover some creative ways to get the capital you need for your business:
1. Get a Loan
If you don’t have the cash you need for your business, but you have a decent credit rating, you may want to consider quick small loans as a way to secure the cash you need.
You may be thinking it too risky to take out a loan you might not be able to pay off easily. This is a valid concern if your business doesn’t take off quickly, but paying off these types of loans isn’t as difficult as you think – even if your business doesn’t succeed. With low-interest rates and flexible repayment options, you get the cash you need on your terms.
2. Ask Friends and/or Family
If your piggy bank is empty and you don’t have a good enough credit score for a loan, asking friends and/or family to float you a loan is your next best option. Because you’re close, friends and family are more likely to look past your credit score and usually don’t impose such strict repayment terms as a bank.
Of course, borrowing from family or friends carries plenty of risks, too. Nothing stresses relationships more than misunderstandings over money. If you do decide to ask a close friend or family member to fund your venture, be sure everything is spelled out in writing so there are no misunderstandings.
3. SBA Loan Programs
The SBA doesn’t lend money directly to business owners. However, it works closely with non-profit lenders, credit unions, and qualifying banks to offer guaranty programs for loans.
A common loan program through the SBA is the 7(a) Loan Program. This loan can be used to fund a new business or expand on an existing one, although the SBA won’t back any amount over $5 million under this program.
4. Find an Angel Investor
When you don’t have enough of your own money and you don’t have a rich uncle to turn to, you can try to find a wealthy stranger who might be interested in investing in your business. Called an “angel investor,” this type of investor usually asks for equity in your company in return for their contribution. In many cases, angel investors are interested in a particular industry and are always looking for opportunities to invest in new businesses within that industry.
Angel investors not only provide the cash you need, but some even offer advice and recommendations to help you succeed. Many angel investors have a large pool of influential people they can put you in contact with to open doors for you.
No one ever said that starting a business or running one is easy, but it’s made easier when you have the cash you need. Use the suggestions listed above to source that extra bit of capital you need for your business.
