Many people fantasize about owning a small business. Maybe you’re tired of answering to a boss, and you want to follow your dreams instead. If so, starting a company you feel passionate about might appeal to you.
No small business can get off the ground without funding, though. Depending on your situation, you may need to get creative to get your hands on that cash. We’ll talk about 3 clever ways to obtain small business funding right here.
1. Small Personal Loans
Some would-be business owners don’t like the idea of taking out loans to get their company started. However, if you don’t look into some best personal loans as a possibility, you’re limiting your options.
With a small personal loan, you get a lump sum, typically from a bank or credit union, that you can pay back over time. In comparing loans, look for unsecured loans with fixed interest rates. “Unsecured” means you won’t have to put up a house, car, or another asset as collateral. This is generally a better option in case the business doesn’t turn out to be as successful as you hoped. A “fixed rate” ensures the interest rate you’re paying will never go up for any reason.
Bootstrapping is a catchall term that means you’re trying to use other options besides taking out a business loan or outside investment to fund your small startup. If you’re interested in bootstrapping, you might use personal savings to pay for some of the company’s initial startup costs. You can cash in any CDs you have and liquidate your savings accounts as well.
You might sell off stock or use your credit cards to borrow up to your credit card limits. If you’re bootstrapping, it’s also helpful to see if anyone else will go in on the idea with you. If you’ve got a relative or acquaintance who sees your business plan and feels like it has potential, they might be willing to share the financial risk.
Crowdfunding is a new way to raise cash for a small business endeavor. You can use a website like Kickstarter or Indiegogo and make your pitch to the people.
You set up a 30-day fundraising campaign during which you try and generate as much interest in your idea as possible. For this to work, you’ll probably need to appeal to a community that has a particular need.
You can also lure people into contributing by giving them a gift, a discounted product or service if you reach your goal, or maybe even equity in the company. With this method, you assume the least amount of financial risk since you don’t lose anything if you fail to reach your stated monetary goal.
One of These Options Can Get Your Company Going
If you’ve got an idea for a small company, there are plenty of creative ways to gain funding for you to explore. For instance, you might use a crowdfunding campaign or you might look into securing a small business loan with a bank, credit union, or other lending entity.
If you have assets you can liquidate, bootstrapping is another option. If you go this route, though, make sure you have a sound strategy and something to fall back on. It also may be helpful to get someone to go in on the idea with you so you don’t shoulder the entire financial burden alone.