Funding a startup business can be one of the most daunting tasks a business owner faces. But there are numerous ways to secure necessary funding for your new endeavor.
Credit Cards as a Funding Option
If your credit is good, credit cards can be an efficient and fast way to obtain the funds for your startup. They’re great for equipment purchases, supplies, advertising costs – anything related to running your business! Just be mindful of high interest rates which could quickly add up to more than expected.
A personal line of credit from a bank can provide you with funds when needed in small amounts. However, keeping this account requires timely payments and interest on any borrowed money.
Applying for a Small Business Grant
If your startup is small enough, you may qualify for money through government or non-profit programs. These grants are usually an ideal solution for entrepreneurs who do not meet the eligibility requirements for traditional loans and don’t report to major credit reporting bureaus.
Unfortunately, these grants tend to have a single winner, so your chances of success are usually slim. But if you do win, the money could be an invaluable tool in kickstarting your business venture.
Selling a Share of Your Company
You can also sell equity in your startup to investors who wish for its success. Doing this may help pay off debts by creating more cash in the bank that you can invest back into building up your business.
But there is a cost: You give up some control over your business and income. Furthermore, if the venture fails, you could potentially lose all of the investment made in it.
Your eligibility for a grant or loan depends on several factors, including your credit history which lenders use when assessing whether or not you meet their criteria.
Your financial statements (balance sheet, income statement and cash flow) need to be accurate and verified by an accountant. If you don’t have access to a professional accountant, ask your local chamber of commerce or small business development center for assistance.
Another way to finance your startup is by renting tools and equipment. There are plenty of rental businesses, from power tools to backhoes.
Home owners have the advantage of accessing their equity to finance a startup business venture. You could also take out a business loan instead of using your home equity for this purpose.