Check out these avenues for raising funds in this unpredictable market
Even though today’s capital markets are unpredictable and tumultuous, entrepreneurs still have many avenues for raising funds for their startups. In addition to finding angel investors or making financing deals with suppliers and customers, entrepreneurs can also use these resources to fund their dreams.?
Over 80 percent of startups are self-funded. The vast majority of entrepreneurs tap into personal funds, like credit cards, savings, their 401K or bank or home equity loans, to get their businesses on their feet. However, only 66 percent of entrepreneurs use only personal funding to launch their startup.?
The United States Small Business Administration (SBA) made applying for an SBA-backed loan easier than ever before. Business owners who have been pre-qualified by a bank can skip the standard SBA application and receive a loan decision within just 36 hours of filing.?
If you are a small or young company, your best bet for building a banking relationship may be with a community bank. These banks may have fewer products than their huge cousins, but they offer more flexibility to budding entrepreneurs.?
If your startup is in the technology field, you may be eligible for a Small Business Innovation Research (SBIR) grant. The funds are provided by certain federal agencies who want to support fledgling tech companies offering innovative solutions they want to commercialize. Women and minority business owners may also be eligible for other government grants.?
Tips for Getting Startup Cash?
No matter which avenue for funding you pursue, follow these tips to bag the cash.?
- Stick with what you know. You will be more successful obtaining seed money and running your business if it is in a field you are already familiar with.
- Become the first investor. Get your company off the ground using your own cash flow or savings. This shows investors that you are seriously committed to your company in the long-term.?
- Approach family members and friends. These people will likely be the most willing to support your business and take a chance on it. They may also be more flexible about repayment terms than banks and can also tap into their own networks to get more startup capital for your business.?
- Network! Meet investors at venture-capital conferences, where you can also learn about businesses that have received funding and compare them to your own startup.?
- Be prepared. Before sitting down with a venture-capital firm or bank, create a very detailed business plan. It should include your plan for finding customers, your profit and revenue projections and how much you need to grow your business.