Financing a small business venture is an adventure all on its own. The reality for most entrepreneurs is that they sort of piece together the funding they need to cover everything.
Many small businesses draw funding from several different sources, and work towards a goal of phasing lenders out completely within a certain timespan. It is not common for funding to come from one single source.
Depending on the business model, yearly projections, and how well an entrepreneur is able to sell themselves to potential financial partners, the money to get everything started could come from five different places.
The point is, the money will not come from anywhere if entrepreneurs have no idea how to gather funding. Luckily, this short overview will highlight a few resourceful ways to finance a small business startup.
Traditional methods do produce results
Take out a personal loan. Online lenders are much more lenient on their requirements than a standard brick and mortar establishment. Most people have a little better luck doing business with online lenders.
Many online lenders do not require a credit review. For example, PayPal has a “working capital” lending program that allows PayPal Business account holders to take out a loan with no credit check. PayPal bases the amount they offer on the account activity of the person/business applying for the working capital loan.
Take a piece of the 401k savings
Most people would simply shiver at the idea of breaking into their 401k funds to finance a startup, but there is nothing to fear. If the process is properly executed, individuals can tap into their 401k without accruing any financial penalties.
Thanks to provisional tax codes, tapping into a person’s 401k is possible, but legally complex. It may be wise to procure legal counsel when choosing this route of financing to assure that all the technicalities are covered.
Crowdfunding has blossomed in recent years
Crowdfunding basically consists of a large network of investors just looking for ways to spend their money. Of course, it is not quite that simple, but the opportunity is there.
With a little time and effort, it works to build a strong crowdfunding page. Work up a solid business plan. Investors will throw money towards a great opportunity, and they know it when they see it.
Attract the attention of an angel investor
Angel investors are pretty self explanatory. They are independent lenders that put their own money into a good business idea for a small cut of the profit in return. It is kind of the equivalent of a “sugar daddy” in the business world (and we do not mean the sticky caramel candies).