9 Small business Funding ideas to increase capital

Small business funding is important for a business to grow and become successful. Everybody wants to have a successful business. But when you start a business it is not a walk-in garden. In a startup, you face many difficult situations such as a lack of money for your business either it is a major issue at that time or a minor.

When you start a business you are in a very important phase. Many businesses don’t survive in the first year and get closed only due to a lack of funding. So as you can see small business funding is very important.

Small business Funding:

As explained above you can measure the importance of funding in your small business. But you need to find how to get funding for small businesses. You can raise funding for your business using these methods explained below:

1.Bootstrapping:

Bootstrapping is raising a company from zero while using your own personal resources or savings. When some founder or proprietor doesn’t have money from savings then he can also have money by keeping family assets or personal assets on the line. By bootstrapping you don’t have outer interference in your business. You can implement your ideas or decisions without any external interference. The owner or proprietor can experiment or can also experiment with his brand.

With advantages, Bootstrapping has its disadvantages also. It is said that about 90% of businesses don’t have successful startups, so your money is lost, and if, then your personal assets or family assets on the line will also be lost.

2.Family and friends funding:

You can have funding from your family and friends for your business. It has benefits that you can get funding at an early stage of your business or even with only a plan. They will put their trust in you and you can have money at a low interest rate with much fewer formalities than that of banks. It provides you full control over your company.

Family and friends funding

But it has great disadvantages like if your startup doesn’t work or you are at loss initially you have a high risk of losing money then you will not be able to return their money. You would want to return your family or friends’ money as soon as possible. But if your startup fails then you will not only lose the money you will also lose your close relationships or their trust in you. So you should think carefully if you want to have small business funding from your family or friends.

3.Raise fund by winning contests:

You can raise funds for your small business by winning contests. Winning these contests will not only provide you small business funding but also will bring you some fame and recognization. Even if you don’t win the contests you can participate and your business will get some recognization. You can build new contacts with some other startup businessmen.

It does not have that many disadvantages But everything has some disadvantages with advantages. By participating in contests you will waste your time too but it is worth it to get some recognization at an early stage of your business. But you have to beware of scammers because they are everywhere in every field. Participate or fill the form of trustworthy contests.

Overall participating and then winning contests will raise small business funding and some recognization and contacts for the future.

4.Venture Capital For business:

Venture Capital is a form of private equity that invested in small businesses when they are at an early stage. They provide investments for small businesses startups and they invest in the company which has the long-term potential of profit. For small companies venture capital has become a famous method to raise funding. They invest in companies that have a high potential for growth or have exceptional growth in a short period and have the future possibility of more growth. Investing in new companies has high risks but the return they get if the startup or company becomes successful is way better.

But they give new companies only 2-3 years of time for profit. Overall it is a great method for small business funding but the investors have a say in your company. But if you are playing with it or you can compromise then it is not bad for small business funding.

5.Bank Loans:

For small business funding, you can also take loans from banks. But they don’t give money to startups. They provide loans only when you have a 2-year-old business or a profitable business or stable business for some time. They provide money equal to your asset’s value only. You have to fulfill many formalities and wait some time for a loan to approve and you eventually get money.

Bank Loans

6.Funding From Business Incubators & Accelerators:

Business Incubators and accelerators provide help and guidance for startups for companies. Business incubators provide working facilities and shared facilities such as internet services. Many business incubators are run by nonprofitable organizations. Entrepreneurs can seek advice regarding their business and can contact market consultants and business advisers. Propertior can stay in an incubator facility for up to 3 to 5 years maximum.

Business accelerators have some characteristics of business Incubators but business incubators help startups and nurture business as business accelerators help to run and take giant steps. They provide initial funding to businesses for some shares about 6%.

7. Angel Investment:

Angel investors are the investors who have more cash and take big risks for startups of new business so that they can take big returns. For these investments, they can take up to 30% of the shares of the business. They Generally invest in an early stage of the company.

Angel investments have it’s shortcoming too. They provide less funding than venture investors (explained in point number 8).

Angel Investment

8.Crowdfunding:

Crowdfunding is used to bring investors and entrepreneurs come together. A group of people through social media invests in a particular business. Entrepreneurs present their plan of business and future targets then people take an interest in it and invests in them. Now crowdfunding is becoming famous. It provides fame to business too. There are now many websites for the purpose of crowdfunding. But it has shortcomings too. Due to its ease and famousness nowadays it has become highly competitive. Crowdfunding sites are Gofundme, Kickstarter, Indiegogo, etc.

9.Government programs:

In every country, the government starts programs to help the business that need startup. You can search for the latest programs for startups. They are much likely of low-interest rate if required, of great security and they try to improve their economy too. They serve the purpose of small business funding. But the formalities and eligibility criteria take time which is its big advantage.

Government Programs

Summary:

You can start a business with an idea but you need to think of a way to raise the funding for your startup. Thes method explained above are very useful for small business funding. By taking some notes and taking precautions against scammers you can take your startup to success.

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