Funding the Dream: How to Get Funding for a Small Business

You know you have a great idea for a startup, but you’re not sure how to get funding for a small business. The financials don’t have to stop you in your tracks, though. There are lots of ways to raise the capital you need to make your dream a reality — and a success.

From bootstrapping (when the business funds itself) to crowdfunding (web-based projects where entrepreneurs reach out to potential backers) to getting a loan through the Small Business Association or banks, there are lots of paths to consider. It may seem overwhelming as you get started, but evaluate the following options to help you decide which avenue is best for your new venture.

Looking to SBA Loans and Banks

Many small business owners like to go the traditional route by seeking loans from a financial institution. The Small Business Administration doesn’t directly lend money, but instead partners with many financial institutions to guarantee some loans so that it’s easier for a small business to obtain funding. Your enterprise must meet certain requirements, of course, but this route might be just the thing if you can’t obtain funding elsewhere.

Banks can also be a great source for funding your startup, as they routinely make small business loans, although lending standards have progressively become stricter. Keep in mind that banks typically require historical records and may want the loan secured with assets. But since banks like J.P. Morgan Chase and Bank of America specifically earmark funds to help small business owners get a leg up, why not apply and give it a shot?

Finding Angel Investors

When it comes to starting your business, you can turn to willing individual investors to help get your idea off the ground. Angel investors are known for small business lending, often forming investment groups to minimize risk and pool research. To find a potential angel investor, contact your local chamber of commerce, which may know of interested parties. Online platforms such as Angel Investment Network and Gust can also be a good starting point. Sometimes all it takes is one connection, and your small business is ready to roll.

Should you find yourself pitching your small business to a possible angel investor, make sure you’re prepared. Be concise with your request; do your research; share solid marketing and sales plans; and show your passion for your project. Angel investors can smell fad-followers a mile away and generally shy away from get-rich-quick schemes.

Try Crowdfunding

The internet could be your best friend when it comes to funding. Websites like Kickstarter and Indiegogo connect entrepreneurs with thousands of individuals around the world who want to support new, creative projects. Look at crowdfunding as basically a quick, one-time fundraiser, not a long-term source of money. You have a set period of time to attract backers and reach a designated dollar goal for your project. Leveraging social media or even hiring a crowdfunding expert could translate to a huge return on your campaign.

Locating Venture Capital

To drive business early, you’ll need early-stage funding. Enter venture capital firms. These groups typically make large investments — think millions — and may require a sizable share or controlling interest in your company. So, keep that in mind if you want to be the one calling the shots. The best way to connect with a venture capitalist is through your network of business associates, rather than cold pitching.

Relying on Self-funding

If you prefer to take the self-funding route, then you aren’t alone. Many entrepreneurs fund their small businesses from day one. Using savings, personal debt (such as a second mortgage or credit cards), or even selling assets to generate cash are all ways small business owners get a jumpstart. It may take longer to save money before you grow organically, and most individuals who decide to self-fund minimize their expenses as much as possible. Instead, they put every penny they can into their business, including all or much of the business’s early profits.

One pro to using your own money instead of borrowing or raising it another way is you won’t have extensive loan payments to bog you down. Some entrepreneurial spirits even continue bootstrapping until their business is in the green.

No matter which path you choose to go down, your business will likely need an office. This is where CORT can help. CORT Furniture Rental is a convenient option for startup businesses, allowing you to conserve those early dollars by renting instead of purchasing your office furniture, as well as providing flexibility as your startup grows and changes. CORT creates work environments during times of transition that help everyone get up and running and stay that way.