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America is the land of the free, the home of the brave, and the captain of capitalism. Anyone with a good idea and a plan can start a successful business. However, there is one more vital component – funding.
Without proper funding, even a perfectly designed business will never even get off the ground. But what are your options?
Keep reading for our top five ways to raise money for a business.
1. Apply for a Business Loan
The most traditional way to raise money for a business is through the bank. Using a bank as your lender comes with several perks.
First, you can get a fixed-rate loan with the exact same payment every month until the loan is paid off. Second, a bank is basically an investor without stock in your company. As long as you make the payments, the will stay out of you and your business’s life.
However, getting approved for a bank-funded business loan requires excellent credit. If your credit score is low or you have any negative issues in your credit report, you may not get approved at all. Alternatively, you may be able to get approved, but not for the full amount you need.
2. Apply for a Business Line of Credit
Business lines of credit provide an alternative, short-term financing option. These can be obtained by business owners with good, but not great credit. They’re an open line of credit (usually smaller amounts), that business owners typically have to pay back sooner than the traditional bank loan.
3. Ask for Donations and Investments From Friends and Family
While it may not be your first choice, your best option may be raising enough money for a modest start-up company by turning to friends and family. Be honest about your endeavor, how much money you need, and why you can’t (or choose not to) get your funding elsewhere.
You can incentivize them to help you raise money for a business by offering a small stake in the company, permanent discounts, kickbacks, or eventually, a full refund.
4. Get As Much as You Can From Bootstrapping
Bootstrapping refers to pulling all of your personal finances together to raise money for a business. This includes checking accounts, savings accounts, credit cards, personal lines of credit, home equity lines of credit, and more.
This option has it’s risks, but it also means not being a prisoner to banks or investors.
5. Consider Crowdfunding
Lastly, you can consider using public crowdfunding to raise money for a business. Crowdfunding can be a huge success or a huge failure. There are several websites and companies than provide a platform.
Using the provided platform, you shoot your business idea out there and if people like what they see, they’ll contribute funds for exchange for a stake in the company. Be warned, however, as some companies only allow you to take the money if you hit your goal amount.
Want More Ways to Raise Money for a Business?
Whether you’re looking for ways to raise money for a business, fix a car, prepare for retirement, and everything in between, we can help.
Check out the rest of our articles and categories with instructions on how to do things!