Startup ventures often encounter different challenges than already established firms, especially when it comes to obtaining business financing. With no credit or revenue history, startups often struggle with not having access to some of the funding options available. In the article A Business Owners’ Guide To: Financing Options for Startups featured on BusinessLoans.com, a list of alternative funding options is presented to assist the startup founder with finding the right financing for their new business.
The article begins by exploring loans from friends and family, noting that these types of loans can be an easier option for startups looking for seed money. You (typically) don’t have to pre-qualify for friends and family loans, but it is a good rule-of-thumb whenever money is involved to have a contract or agreement between both parties.
One of the newest types of funding accessible to startups is crowdfunding. With the expansion of the internet and social media, entrepreneurs have utilized crowdfunding platforms to help reach audiences and customers around the globe. Crowdfunding may not have the requirements that a traditional loan has, but it does require a significant amount of commitment and time for a campaign to be successful.
For more traditional funding, the SBA 7(a) loan program which can help establish cash flow for startup businesses, and Micro Loans which startups can use to purchase fixed assets like equipment and furniture, are suggested in the article but also acknowledged that such funding may be more accessible to companies that have been in operation for a couple of years.
Another loan option discussed in the article is retirement loans, though it is cautioned that these types of loans do involve a higher level of risk because you are taking your retirement savings and investing it into a new venture. As recommended in the article, retirement loans probably aren’t a viable first choice for startups due to the risk involved and it is important to have your attorney review all documents before moving forward.
From traditional lending options such as SBA loans and micro loans, to not so traditional options like crowdfunding and 401K loans, the article A Business Owners’ Guide To: Financing Options for Startups illustrates that there are funding options out there for small businesses at all stages. For the full article, visit A Business Owners’ Guide To: Financing Options for Startups.
The Inland Empire SBDC will be hosting a seminar on startup financing on June 17, 2015 at the Carnegie Cultural Center in Upland, CA. Hear from experts on 401K loans, the SBA 7(a) loan program, and crowdfunding and learn how to put together a business plan and financial projections that will help put your new business on the path toward success. Registration is recommended as seating is limited; visit www.iesmallbusiness.com to register for this workshop today.