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Five Sources of Financing for Your Small Business

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Let’s face it – not every business owner today is proud of being financially stable. There are a lot of startups and small businesses whose expenses turn out to be far greater in their starting years, which calls for immediate action. That action, in this case, relates to obtaining finance from a particular source.

Now, small businesses usually refer to banks and similar institutions as their go-to financing source. As surprising as it may sound, there are a lot more sources to fund your business out there – and we are listing the best ones below.

1. Online Lending

The digital world introduced us to a new reality, where finance seems a lot easier as well. Online lenders have become a great alternative to business loans thanks to this new era, where intuitive platforms change the old desks. The application process requires business owners to answer some questions regarding the sum they need and a couple more about their business.

The best part is that a lending application takes about an hour to be completed and the decision and accompanying funds arrive in matter of days. All that at a few clicks away.

2. Angel Investors

Finding an angel investor to support your small business financially from the start is perhaps one of the best decisions you can make. However, you must be aware that it usually comes with a part of your company. Yes – angel investors are here to help businesses and startups in exchange for a return on their investment or shares in the company itself. The ROI they work with usually varies around 20% to 25%.

Another great thing about angel investors is that not only they are able to financially support a business – they have the right experience and business development knowledge to radically improve every part of it.

Oh, and did you know that companies like Google and Costco started this way? Check out this great source for small business capital.

3. Crowdfunding

Crowdfunding got very popular in today’s world, mostly because of the pioneers that led the revolution – the websites Kickstarter and Indiegogo. Basically, all you need is a business idea/model, a nice plan that supports it and some knowledge to put it all together and pitch your master-plan to the world.

Once you do that, the investments start piling up, depending if the audience likes your idea and wants to be part of it. Whether you offer a sample of the product for a particular sum of money invested in your business or a ‘thank you’ note, make sure to read the fine print of every crowdfunding website before posting on it – you know, just in case.

4. Grants

If your business falls under the research/science category, you may be able to get grants from the governments. In case you don’t know what a grant is, it’s basically a sum of money given to you by an organization (especially a government) for a particular purpose and exchange of information from your side.

There are a lot of grant programs in every country nowadays, in niches like technology, innovation research, statistics etc. You only need to meet the federal research-and-development goals and have a high potential of commercialization to obtain your small business grant.

5. Venture Capitalists

Venture capital is money that you get if your startup or small business is considered to have a high growth potential and high risk potential. In other words, your small business or startup should have what it takes to grow over the next years but still have an exit strategy in place.

Venture capitalists, on the other side, are people who specialize in this matter, offering advice to entrepreneurs about the success rate of their products/services or focusing on specific industries. However, they do look to recover their investment within three to five years after it has been settled, which is definitely something to have in mind.

If you have the right idea for your business but lack the capital to actually start it, these financing sources are definitely for you. Check out these great small business financing options to get more specific options, or learn more about how to start or grow a small business without a loan. Fingers crossed for a successful future!


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