The age-old expression is true: “It takes money to make money.” That is certainly true for startups. Two of the biggest challenges for a budding small business owner are determining the best options for business funding and then securing the necessary funds.
Why Startups Should Get Funding
It is important for startups to secure adequate funding to:
- Grow the startup concept on as strong a base as possible.
- Capture a healthy market share as soon as possible to be able to compete more effectively.
- Gain value and support from supporters and investors which translates into further success.
- Attract attention in the marketplace which will help with hiring quality employees as well as in attracting customers and partners.
The Primary Reasons That Startups Need Funding
Startups use funding in these ways:
- Working capital; the funds needed to operate the business day-to-day.
- Purchase of assets including inventory, equipment, and facilities.
- Funding investments that drive growth.
3 Ways for Startups to Get Business Loans
The three primary ways that startups can secure business loans are:
- Self-funding. Reportedly, 90% of startups are self-funded from savings and rollovers.
- Traditional small business term loans that are secured from commercial banks and credit unions.
- SBA loans. The Small Business Administration facilitates loans through their partner lending institutions. The most common type of loan is the SBA 7(a) loan. Other types include an SBA Microloan, an SBA Community Advantage loan, an SBA Express loan, and an SBA CDC/504 loan.
Additional Funding Sources
Additional funding sources for startups include:
- Angel investors. These are private investors who can provide early investment infusions into a new company.
- Venture Capital firms.
- Startup incubators.
- Crowdfunding for startups.
- Government grant programs.
- Funds from family and friends.
The choice of funding options is an important one. You want to make good on the financing terms and protect important relationships that are associated with each choice.
Seek Expert Funding Assistance
Contact Magis Funding to help achieve your business goals. Experienced professionals with great solutions tailored to your financial needs.