7 Sources Of Funding For Small Business Startups
According to a recent report by the U.S. Small Business Administration, small businesses account for 99.7 percent of all firms in the United States. In other words, if you’re starting a business, chances are it’s a small business. And if you’re starting a small business, you’re probably wondering how to finance it. Here are seven sources of funding for small business startups.
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Personal savings
This is the most common source of funding for small business startups. According to the SBA, about two-thirds of small businesses are financed with personal savings. If you’re starting a small business, tap into your personal savings account to get it off the ground.
Family and friends
If you don’t have enough personal savings to finance your small business, you can always turn to family and friends. According to the SBA, about one-quarter of small businesses are financed by family and friends. So if you’re short on cash, don’t be afraid to ask your loved ones for help.
Credit cards
Credit cards can be a great way to finance a small business. They offer flexibility and can be used for a variety of expenses, from office supplies to marketing campaigns. Just be sure to use them wisely and pay off your balance each month to avoid costly interest charges.
Small business loans
If you have a good credit score, you may be able to qualify for a small business loan from a bank or credit union. These loans can be used for a variety of purposes, from financing inventory to paying rent. Just be sure to shop around for the best rates and terms.
Small business grants
If you’re starting a small business that will have a positive impact on your community, you may be able to find grant money to help you get it off the ground. The SBA offers a variety of grant programs, and there are also many private foundations that offer grant money for small businesses.
Angel investors
If you have a great business idea, you may be able to attract an angel investor. These are individuals who invest in small businesses in exchange for a equity stake in the company. Angel investors can provide much-needed funding for your business, but they also bring valuable experience and connections to the table.
Venture capital
If you have a high-growth business, you may be able to attract venture capital. This is a type of investment typically provided by institutions or firms that specialize in high-risk investments. Venture capitalists typically invest large sums of money in exchange for a equity stake in the company.
Small business startups can be financed in a variety of ways. The best way to finance your business will depend on your individual circumstances. But no matter how you finance your business, be sure to use your funds wisely to ensure the success of your startup.
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