What Avenues Do I Have in Order to Finance a New Business Venture?

If you dream about entrepreneurial success, you aren’t alone. The SBA has estimated that there are upwards of 627,000 new businesses per year in the US.

The first thing you need before starting up a new business venture is funding. You need the funds to cover employee salaries, equipment, your new workspace, and more.

But how do you find investors to back your startup? We’re talking about the top seven sources of traditional and non-traditional new business funding next, so keep reading for everything you need to know.

Traditional Funding Sources

Traditional funds offer near-guarantees that you’ll have access to your new business. These types of funding are tried and true. Some of the top entrepreneurs in the world have used the following methods.

Self-Funding

Do you have savings? Smart business owners use their own funds to start up new ventures. That way, if the business falls through, you aren’t on the hook with anyone but yourself.

Grassroots Funding

Grassroots funding is one of the oldest forms of financing around. It simply means asking friends and family for donations.

Many business owners offer grassroots investors added interest. Or they may grant friends and family a stake in the company once it starts turning a profit.

Bank Loans

Banks have tons of products to offer new business owners, whether you need a short-term loan, equipment financing, or a business line of credit.

The downside to bank loans and lines of credit? You may need a pre-established business credit history. Without that, you may have a hard time qualifying.

SBA Loans

The Small Business Association of America provides small business funding in the form of microloans. You can get up to $50k to start your business. Best of all, SBA loans can offer highly competitive interest rates.

Venture Capital

Venture capitalists (VCs) are individuals and institutions that back promising new startups. They’re also sometimes known as angel investors.

The best thing about VC loans is that they’re typically uncapped, and you don’t actually have to pay the amount back. Instead, you must offer partial business ownership to the VC firm or individual angel investor.

Alternative Funding Sources

These days, there are so many more options available for small business funding. Here are our two favorite ways to raise funds for your startup.

Crowdfunding

With the advent of technology came the ability to raise money from strangers online. That’s the concept behind crowdfunding — entrepreneurs can post their business idea online and seek donations from people who support the idea.

Factoring

Factoring is a newer type of small business funding. It’s also known as accounts receivable financing.

The one downside to this model is that you must have accounts receivables to borrow against. That means you have to have an established business before you can take part in factoring.

Get Funding for Your New Business Venture

There are dozens of ways to fund your new business venture. We’ve only scratched the surface with this list.

Looking for more ways to finance your startup or small business? You’ve come to the right place. Keep checking back daily for articles like this one!

Vinay Kumar
Student. Coffee ninja. Devoted web advocate. Subtly charming writer. Travel fan. Hardcore bacon lover

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