Newcastle Herald

6 Smart ways to raise funding for your small business

6 Smart ways to raise funding for your small business
6 Smart ways to raise funding for your small business

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For most small business owners, one of the biggest challenges that they face is how to raise capital. Capital comes in many different forms and many people often struggle to find the right sources of funding.

Some of these include banks and investors, while others turn to friends and relatives. While many small businesses do well in the traditional banking sector, more are becoming aware of how to raise the funds that they need through smarter, less-traditional means.

There are many ways for small business owners or startups to gain reliable funding - here are some options to look into:

1. Start With Personal Financing

One of the best ways is to use your personal savings, and there's a reason why you should first look into your wallet.

But what if you don't have a lot of liquid cash on hand? You can also tap into your savings, investment portfolios, or retirement funds. You can use some of your equity to secure the loan for your small business.

Personal financing can benefit you by making you appear more confident in your business plans thus attracting other people in investing in your venture.

2. Seek A Loan From Family And Friends

A personal loan from friends and family may be pretty easy to obtain if you're on good terms with people around you and they also have the means to provide such funding.

Traditional financial institutions usually have very strict requirements such as a certain amount of income, a good credit score, and many other standard factors. It may also be cheaper to get than obtaining a loan from a bank or a lender.

3. Obtain A Business Loan

A small business loan is a great solution that can help you get the money that you need to help grow your business and help your business succeed.

Don't let small business loans deter you from your dreams of building your own business.

Even though it can be difficult to get a small business loan, there are several things that you can do to increase your chances of success. Once you've done these things, you'll be well on your way to securing the funds you need.

David Levy, who is the founder of FastBusinessLoans.com.au, says that a good way to get reliable funding for your small business is through a bank, credit union, or similar financial institution.

When you apply for this type of loan, you may have to put up the business as collateral.

In most cases, you'll need to provide a certain amount of the equity as well as the personal guarantee of another individual with good credit.

These loans aren't without fees and high penalties for non-payment, so make sure you're getting the best deal for your situation when looking for a business loan.

6 Smart ways to raise funding for your small business
6 Smart ways to raise funding for your small business

4. Apply For Government Business Loans

Another option to raise money for your small business loan is to work with local, state, or federal small business loan programs. These programs are often provided by the local or state government.

They're designed to make it easier for business owners who don't have deep pockets to get the help they need to get their businesses started.

You should take a look at your local government's website to find these opportunities and apply for them.

Many grants are provided for research and development, for students, and for small business start-ups.

However, it can be quite a time-consuming process and can raise questions about your business plan and finances.

5. Look For Investors

You can also work with private investors such as angel investors or venture capitalists to obtain funding for your small business.

Angel investors are business people on the lookout for potential businesses to put their money in.

Typically, angels will provide their cash investments either completely or in part through a private equity transaction, which will allow them to receive their investment back through your business.

Venture capital, on the other hand, is funding pooled and managed by an entity. However, many investors want to be able to see a tangible product or a pitch that relays your sound business plan before they invest in your business.

Venture capitalists and some angel investors may also demand some control and ownership of the company.

6. Consider bootstrapping

Bootstrapping is a cost-effective way to maximise the resources of your business while looking for other sources of funding. One way your business can utilise this option is by sharing equipment and offices.

You should delay capital and large purchases in the meantime and learn to negotiate with suppliers to get the best deals or terms. In essence, bootstrapping is making the most of whatever small investment you have ready or available to put into the business and growing it from there.

Takeaway

There are many options available to you when you want to raise money for your business.

You just need to be creative and think about your business' needs and financial future to find the best option.

You can also use more than one of the suggestions above. Having a well-planned business plan will allow you to access the funds you need quickly so that your business thrives so that you can pay back or replenish the capital you used.

Don't rush into anything and always check out all of the possible options before making a final decision.