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How to Secure Funding for Your Small Business or Startup

With the exception of freelance writing and design (in which you use materials you already own to get started), starting up your own small business or project is going to take money. You need to be able to pay for your business registrations. You need to buy equipment. You need to find a good work space. You might even need to hire employees. And, if you are like most of us,  you only saved up enough money to cover yourself for six months, not enough to support everything and everybody for six months.

This means that you are going to have to find the money you need from a third party source. Thankfully there are lots of them out there–and yes, some of them will even offer funding to brand new startups that haven’t had a chance to build up their business credit yet. Let’s take a look at some of the best.

Installment Loans

Similar to a payday loan, installment loans are smallish (think four figures, not five) loans that are approved and funded quickly, often giving you cash in hand within a day or so. The big difference between installment loans and payday loans is that the terms are better and, instead of paying the loan back all at once, you pay it back in small installments (hence the term) over time. The length of time you take to pay back your loan will often determine your fee schedule and interest rate. The primary benefits of instant installment loans are that the credit requirements are low and you can only borrow a small amount so you don’t have to worry about your ability to pay it back in full. Another big perk is that it can save you from having to ask friends and family for loans to help get you started.

Friends and Family loans

If you do decide to ask your friends and family for financial help, one of the better ways to do it is through a social lending site. These companies act as the “middle man” between you and whoever wants to chip in to help you out. You get one lump sum once the funding period has ended and you pay it back as one lump sum to the social lender. The social lender, then, distributes those payments back to your lenders so that everybody gets paid back properly. You probably won’t even know how much someone has chipped in, which takes the pressure off of people who might worry about not being able to contribute much.

Grants

There are literally hundreds of thousands of dollars worth of small business grants available, you just have to hunt them down (and have your application approved). The Small Business Administration has a lot but there are independent funds available as well. Typically these grants are reserved for businesses run by minorities or for non-profits, but if you hunt long enough you’ll likely find at least a few for which you are qualified to apply. The great thing about a grant is that you don’t have to pay it back (though you do have to justify how you will spend it).

P2P Lending

We talked about social lending before. That is one type of P2P or peer to peer lending. Another type of P2P lending is something more straightforward. These loans are typically small (if they go into the five figures, they are *low* five figures) loans obtained directly from an independent funder. You can find these lenders through P2P portals like Funding Circle, Lending Club, and Prosper. You’ll need to have at least decent personal credit to obtain these loans, but their terms are often good and the payment process is straightforward.

The Crowd

Remember when Kickstarter seemed like a fluke or a fad? It has more than proven its mettle as far as helping startups is concerned. If you are an independent business or even an independent artist or freelancer and you have a definite project in mind, Kickstarter can be a great way to raise the capital you need. If you decide to use Kickstarter, though, you will need to have definite goals and it helps to already have a good sized audience. If you are brand new or your audience is small, try other sites like IndieGoGo. Unlike Kickstarter, the IndieGoGos and GoFundMes allow you to keep however much you raise, whether or not your project gets fully funded.

The money you need is out there. The avenue that you pursue to obtain it will depend largely upon your type of business, it’s age, and how much you need. You might have to submit a few applications before being approved, but if you keep working at it? You’ll get there.

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One Response to How to Secure Funding for Your Small Business or Startup

  1. Tadhg O Connell September 20, 2016 at 2:29 pm #

    Small businesses in Ireland should now consider a Merchant Cash Advance, a new product recently launched to the irish market by Liquid Finance

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