How to Secure Funding For Your Business
According to Entrepreneur.com, some of the biggest struggles for a small business are cash-flow problems and lack of growth. Over half of those businesses who are facing such issues look for funding or credit lines to keep them afloat, but 20 percent of them are denied.
If you hope to secure funding for your business, be sure to keep these tips in mind to improve the odds of success.
Be Sure You Have a Solid Business Plan
No matter what industry you’re in, perhaps you’re a Pittsburgh lawyer, or you plan on selling software in Boston, you need to have a sold business plan to attract investors. You want it to get potential investors excited about what you’re doing by communicating it in the most effective way you can. Be sure to back up your claims with plenty of research to ensure them that you’re knowledgeable about the industry and can potentially run the business in the most effective way possible.
Look to Friends and Family
Once you have your business plan written out, you may want to consider talking with friends and family to help fund your business. Even if they don’t have tens of thousands to invest, some may be impressed enough by what you’re doing to give you a few grand to help you get going. That business plan will help you best explain how your business will work, such as what you’ll be selling, how much you’ll charge, how you’ll profit and so on.
There are small business development centers across the country that can help you launch your business. The Small Business Administration has over 60 and many universities have one too. These organizations can help connect you with angel investors for funding and groups of entrepreneurs for networking as well as help you determine what type of funding and loans you might qualify for. It’s also worth checking with your local chamber of commerce in guidance on where to get local funding.
Seek Angel Investors
Tech startups in particular may want to start with angel investors which are typically established business professionals who have a high net worth and want to invest in companies with promise. They generally invest anywhere from $10,000 to several million dollars and can help you with the necessary capital to really get you going, such as office space and hiring staff. There are multiple ways to find them, from AngelList, which connects entrepreneurs with interested investors to the Angel Capital Association which includes some 330 angel investor groups.
Get a Microloan
If your business lacks collateral or a credit history, it can be difficult if not impossible to secure a traditional bank loan. Instead, consider a microloan, which is a small business loan that ranges from $500 to $35,000. The nonprofit organizations offer smaller loan sizes and usually don’t require as much documentation as a bank, though they typically charge slightly higher interest rates. They’re ideal for entrepreneurs with a business facing a capital cap and need capital to service a contract or for equipment, as well as for startup entrepreneurs.