In the world we live in today, starting your own business has never been more possible. If you have a brilliant business idea, the drive, determination, and business knowledge to pursue it, then what’s stopping you? For most new business owners it’s funding.
But you don’t have to let business capital stand in your way in today’s day and age. If your business is based in the U.S. there are a myriad of ways of securing the funding you need. To learn more about U.S. business funding, just keep on reading…
5 Realistic Options of U.S. Business Funding
Whether your business is just starting out or you don’t have the best credit score, there are a number of reasons you may not qualify for a traditional bank loan. Or, perhaps you don’t want the terms of a bank loan looming over you so you’re looking for an alternative means of business funding? Whatever the case, here are 6 realistic options to consider:
1. Community Development Financing (CDFIs)
The U.S. is host to thousands of community development finance institutions (CDFIs), which are spread throughout the country. These institutions provide small businesses with startup capital, based on reasonable loan terms.
These community lenders are non-bank lenders and assess each candidate in a different way when compared to traditional banks. For example, they look at individual circumstances when assessing credit scores. CDFI lenders also do not need as much collateral as traditional lenders.
Crowdfunding has become incredibly popular in recent years, and not just for social causes. Essentially, crowdfunding on sites such as Kickstarter and IndieGoGo allows small businesses to collect small investments from several different investors. In essence, this means that a startup does not have to rely on one big investment or a singular investment source. This is a good option to push your startup through its ”seed” phase — while your business is still in the development phase.
3. Venture Capital
A venture capitalist (VC) is an outside entity that takes part ownership of your company, in exchange for capital. This percentage of capital is negotiated between the two parties but is usually based on the overall value of the company. This is a great option for startups that can’t offer much physical collateral to tie a loan to. A relationship with a third party venture capitalist is not only financial. Many VCs offer years of business knowledge, industry contacts, and financial acumen, too.
4. Angel Investors
Contrary to popular belief, angel investors and VCs are not the same thing. VCs are usually large, well-established corporations that look for investment opportunities in smaller businesses. Angel investors are singular individuals who are more likely to invest in a startup that may not have the best demonstrable growth. In other words, they are more likely to give your small business a chance, when compared to larger venture capitalists.
5. Government Grants
If your business is based in the science or research fields, you could qualify for a business grant from the U.S. government. Through the Small Business Innovation Research program, your business could access the funding it needs from the U.S. Small Business Association (SBA). However, startups must meet federal development and research goals and will need to display a good potential for commercial success.
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We hope these U.S. business funding options have left you feeling a little more inspired if you’re looking to start your own business.
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