One of the biggest challenges any new business owner faces is securing funding. Starting a business usually means an abundance of initial expenses. While many entrepreneurs look to banks and traditional lenders for startup funding, there are plenty of underrated ways to fund your small business.
Small Business Grants
The Small Business Administration (SBA) offers a variety of grants for new business owners, especially veterans, women, or members of minority groups. The application process may take some time, but it can really pay off if you earn that grant.
Crowdfunding
Do you have a network of friends and family who are interested in seeing you succeed? Start a crowdfunding campaign on a platform like Kickstarter or GoFundMe. This way, the people in your network can donate small amounts of money to help you reach your goal.
Tip:
To incentivize folks to donate to your cause, offer gifts like a unique t-shirt or a gift card to your shop to those who donate a certain amount.
Angel Investors
An angel investor is an individual with plenty of capital to spend who’s always looking for new and interesting businesses to invest in. Attend networking meetings for business owners in your area and practice an elevator pitch for your business. An angel investor will often ask for a share of equity in your business in exchange for their investment, but they often provide valuable business advice to those who are new to the field.
401(k) Financing
Have you quit your day job to focus on your new business? If you had a 401(k) retirement plan at your old job, it can serve as a valuable source of funding. A Rollover for Business Startups, or ROBS, allows you to roll your existing savings into a new 401(k) program in your business’s name. That way, you can access the funds without paying withdrawal penalties or extra taxes.
If you’re looking for ways to fund your new business that don’t involve taking out a loan, try one or more of these underrated methods. All your hard work and hustle will pay off when you see the first signs of profit in your new business venture!
