Did you know that there are over 31 million small businesses operating in the United States? Although, not all of those businesses will survive long-term. Success largely depends on the ability to raise business capital.
Small business funding can be a bit confusing when you’re first starting out. Have you considered starting a new business but aren’t sure how to obtain startup capital?
The following guide will explore several ways of raising capital and their benefits. Read on and decide which funding method is right for you.
Apply for a Loan
Most funding for new businesses comes from loans, credit cards, and lines of credit. In particular, Small business loans offered by banks and other institutions have great rates and terms.
Typically, you must run your business for at least two years to get a small business loan. You must also produce strong revenues and have a good credit score. Although, loan requirements vary depending on the lender.
Loans get businesses money fast to help pay for things like outstanding invoices. They also help buy machinery, office furniture, and other equipment to help businesses get started.
Prepare any relevant documents like balance sheets and tax returns before applying. Visit cscadvisors.net for more information about taking out an SBA loan.
Crowdfunding campaigns raise funds for a specific project in a short time frame. A large number of people typically donate small amounts of money to meet the overall goal.
Nowadays, most crowdfunding is done through social networks. It makes it easier for supporters to share the campaign with others and generate donations.
Donation-based crowdfunding involves donors adding to the total amount for a new project. Businesses often promise perks for donors after the campaign creates revenue.
Investment crowdfunding is when a business seeks working capital by selling ownership stakes. The stakes get sold online in the form of debt or equity. Those who fund become partial owners or shareholders with the potential for financial return.
Bootstrap Your Business
Bootstrapping is the act of financing your business all on your own. It involves using only existing resources you have on hand. Basically, starting from scratch without venture capital or any major loans.
Consider bootstrapping your business if you only need a small amount of startup capital. Either use your own savings or apply for a 0 percent APR business credit card. It’s a great way to borrow cash without incurring high interest.
Investing some of your own money tends to attract investors and lenders later on. So, it helps grow your company down the line even if you start small.
Ready to Raise Business Capital?
Now you know several ways to raise business capital when you’re first starting out. Consider how much money you need, how fast you need it, and interest rates.
Set realistic funding goals and try not to get ahead of yourself. Remember this guide and start growing your business wisely and efficiently. Check out our business and finance categories for more great tips.