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Live Your Dreams: 11 Genius Tips on How to Finance Your Small Business

Man and woman sitting in cafeteria discussing finance for the month. Stressed couple looking at bills sitting in restaurant wearing uniform apron. Café staff sitting together looking at expenses and bills.

Approximately one-third of small businesses get their start with less than $5,000. Even if you don’t have a ton of money in the bank, you can still start a profitable business.

Of course, the more funding you have available, the easier it will be to get started.

More funding also increases your chances of keeping your business afloat long-term. After all, a lack of cash flow is one of the most common reasons that small businesses shut down.

If you’re not sure how to finance your small business and make your dreams a reality, keep reading.

Listed below are eleven different tips you can use to finance your small business.

1. Borrow from Friends or Family

When you’re looking for small business financing, you might want to consider borrowing money from family or friends.

While this can definitely be an awkward conversation, it can also be a fruitful one if you play your cards right.

To minimize the awkwardness around this type of borrowing, try to borrow just what you need, and work with them to put together a repayment plan.

2. Apply for a Small Business Loan

Banks and credit unions are great resources for small businesses.

Most have several different business loan options available, as well as business lines of credit and business credit cards.

Some banks also allow you to apply for Small Business Administration (SBA) loans through them. Applying through a trusted lender may increase your odds of having your application approved.

3. Apply for Small Business Grants

In addition to small business loans, you can also apply for small business grants. A grant is a sum of money that’s awarded to you with no obligation to pay it back.

There are often many different businesses vying for the same grant, so it’s a very competitive situation. If you can make your business stand out and prove that you deserve the money, though, they’re a great option for funding your dream.

4. Use a Crowdfunding Platform

Crowdfunding platforms like Kickstarter and IndieGoGo are great options for raising money for your business.

If you’re going to use the crowdfunding approach, be sure to offer appealing incentives to get people excited about donating to your campaign.

Remember, too, that most of these platforms work on an all-or-nothing basis, so you’ll need to work hard to reach your goal in order to get the money that comes your way.

5. Enter a Contest

Did you know there are contests out there designed to help small businesses get funding? Some organizations offer financing or cash rewards to business owners who enter their contests.

If you find a contest that seems promising, be sure to pay careful attention to the eligibility requirements and entry fees. You don’t want to be disqualified because you didn’t read the rules carefully.

6. Pledge Future Earnings

Many entrepreneurs see great success from pledging their future earnings.

There are several different online marketplaces that will let you offer up a percentage of your future earnings in exchange for funding right now. This can be a great option for business owners looking to finance their companies.

Keep in mind, though, that this is also a new small business funding approach, so you need to use caution when choosing platforms and working with different investors.

7. Pitch Angel Investors

An angel investor is an affluent person who’s willing to invest in your company, usually in exchange for equity or convertible debt.

Pitching an angel investor can be a great option, but you need to be very strategic when putting together your pitch.

Your pitch should be succinct and free of industry jargon. You should clarify your experience in the industry, too, and be able to show the investor what makes your company unique.

8. Look into Microloans

You might not qualify for a large small business loan, but that doesn’t mean you can’t take advantage of other lending opportunities. Try looking into microloans, for example.

Microloans are small loans (usually somewhere between $500 and $35,000), and it’s easier to qualify for them than it is to qualify for large business loans.

The Small Business Administration even offers microloans, so try looking into those if your application for a regular loan is turned down.

9. Take on a Partner

Sometimes, taking on a partner is a viable strategy for business owners looking for funding.

Of course, if you’re going to take on a partner and use their money to fund your business, that means you have to be willing to listen to and implement their ideas.

Before you take on a partner, make sure they’re someone you trust and get along with. Otherwise, you could find yourself in a very difficult situation further down the road.

10. Negotiate with Your Vendors

If you’re tight on cash and have bills piling up, try negotiating a longer payment term with your vendors.

If you negotiate your payment terms so that you have more time to pay your invoices, you’ll have more cash to work with and will have an easier time meeting all of your company’s financial obligations.

11. Borrow from Your 401(k)

Finally, you might want to consider borrowing money from your 401(k) or another retirement account.

A 401(k) loan can be a great temporary option with relatively low-interest rates.

The good thing about this approach, too, is that, when you pay back the loan, you’re paying the money back to yourself.

You Know How to Finance a Small Business: Now What?

As you can see, there are a lot of different strategies that you can use when you’re trying to figure out how to finance your small business.

The sooner you start implementing these strategies, the sooner you’ll start seeing benefits from your efforts.

Are you interested in using a small business loan to finance your business? If so, we’re here to help at Signature Bank of Georgia.

We offer a wide range of business loan options and business banking services. Apply for a loan online today or contact us to learn more about how we can help your business grow.

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