Finding avenues to finance a small business often proves to be the most difficult step a small business owner faces. It’s also the most necessary endeavor a small business will undertake regardless of size.
Self Financing
The first method is self financing, and it is probably the worst method anyone can use, but this course may be a necessity if the business is viable. This viability maybe the only barrier against the great inherent risk of financing your small business in this manner however. Additionally, incorporating your business rather than a limited liability corporation designation can also be another method of mitigating risk against further losing money if the business incurs litigation that could risk its finances. In other designations, an owner or partners risk their personal finances if things go wrong. Remember, some of the most esteemed business schools in the country repeat the mantra of never using your own money to start a business, so beware.
Crowdfunding
Recently, crowdfunding has provided a financing vehicle that has prevented many new business owners from risking their own money in starting or expanding a small business. New business owners should remember that a large majority of most small business started fail within the first two years of their official inception. The method by which each different crowdfunding website functions are well cited, and new business owners are urged to utilize as many corresponding vehicles that they can even though many forums suggest focusing on one. Although recycling a profile that has been presented on a different crowdfunding platform may not be advisable, utilizing an artistic related crowdfunding to get financing for your advertising artwork for example is a way to utilize multiple platforms without looking desperate or shady for accessing too many crowdfunding sources.
Grants
Grants are another method by which a small business owner can gain the funding to start, bolster or expand their business opportunity. This is the most utilized and least reported method by which many businesses of any size can gain an upper hand. So many successful business owners are recently claiming that they made their business successful single handed without any governmental help, but this is patently false. Most successful small business owners learn to successfully line their coffers with grant money form governmental and nonprofit sources alike. Actually, it could be bad business practices not to pursue this free money.
Small Business Loans
Small business loans to start a small business are so far down on the list because it is likely that most small business owners will not receive this source of funding. Additionally, only an approximate 15 percent of small business loans are granted from large banks or lending institutions. If this is a route that must be sought, credit unions and other community lending organizations accept almost half of the loan applications that they receive.
Advanced Orders
The last method is a very real possibility for small businesses that are experiencing explosive growth and popularity. Advanced orders allow small businesses to borrow against business that is already waiting for their product. Businesses that fit this criteria and meet certain thresholds have a great chance of getting these advanced orders financed.
