Lots of aspiring entrepreneurs have big dreams about starting their own business. Commonly, there’s one big hurdle to making these dreams a reality: Money! Don’t let financial obstacles stop you from starting your business. Consider the many options to help you fund a startup.
1. Borrow money from family and friends
Family and friends are often one of the first places anyone goes when they need money. If the people in your network have money to lend, this can be a great option because interest is low (if they ask you to pay it at all).
2. Tap your retirement accounts
Your instinct might be to never touch accounts like your 401K or IRAs, but there are situations when doing so could be beneficial. This approach is not for the risk-averse, but if there’s a large potential upside and you’re sure to pay the accounts back as soon as you can, using retirement funds to finance a startup can be a plausible option.
3. Get a loan
Business loans are a popular, traditional approach to fund a startup. You can pursue a loan through a bank, an online lender, or an alternative micro-lender depending on your needs. If you’re unable to secure a business loan, you can try to obtain a personal loan and apply the funds to your startup.
4. Use a crowdfunding site
Platforms like Kickstarter and Indiegogo have grown tremendously in recent years. The upside of orchestrating a crowdfunding campaign is that it helps you secure the money you need as well as your initial customers, and it can jumpstart your marketing efforts.
5. Start your business part-time while you continue working another job
Start small and use the money you make at your “day job” to bankroll your business. Once you have enough money coming in to support yourself and the business, quit your job and become self-employed.
6. Meet with venture capitalists
If you have an innovative business and you’re willing to give up equity, venture capitalists can be a good source for financing.
7. Pursue angel investors
Angel investors can infuse your company with cash (at the price of equity) and provide invaluable guidance and business connections.
8. Take on a partner
Again, if you’re not equity-averse, you can sell a percentage of the business to a partner. While some entrepreneurs might have a hard time giving up this level of control, a partner can help spread the workload and bring a fresh viewpoint and ideas.
9. Take out a business line of credit
A line of credit can be a great way to finance a business, since you can take money out as it is needed and pay interest only on what you use.
10. Get a second mortgage on your home
A second mortgage, or home equity loan, can be a relatively quick and easy way to get money for your startup. If your business is incorporated, you can loan the money to your business for additional tax perks.
11. Sell your assets
If you have assets, selling them can get you the cash you need to start your business. Assets can include your home, your car, your jewelry, or any items of value that you own.
12. Use credit cards
While this might not be the best long-term strategy due to the high interest and the potential negative impact on your credit rating, using credit cards can help you get your business off the ground. Just be sure to make paying them off a priority.
13. Open a franchise
There are certain franchised businesses (the UPS Store, for example) that will lend capital to qualified franchisees at an affordable interest rate. This can be a great way to get your foot in the door of business ownership.
14. Enter a contest
A quick online search turns up many contests offered by banks and other organizations for the most promising business plan or the best answers to certain business questions. With cash prizes and mentorship opportunities, winning a contest can start your business in the right direction.
15. Apply for a grant
Banks, businesses, and the government (at local, state, and federal levels) all offer business grant opportunities to the public. Organizations specific to your industry might also offer grants to members.
No matter what your situation, there are so many options to find the money to fund your dream business. It may take some patience and creative thinking, but if you hang in there, you can make it happen!