How to Get Funding for Your StartupSeptember 26, 2022
One of the most daunting tasks as an entrepreneur is figuring out what startup funding method you will choose, and even if you decide to use your personal savings, what if you run out of money?
Banks can be very picky regarding which businesses they will lend to, and many entrepreneurs may struggle to meet their requirements. On the other hand, approaching investors may not be ideal if you wish to remain in control of your business.
It is best to research all your options when it comes to finding the right startup capital option for your business, so read on to uncover all your options and the pros and cons of each.
Types of startup funding
Any method you choose to launch your business will fall into one of three categories: self-funding, investors, or loans.
Within each of these options, there are additional choices.
The Small Business Administration (SBA) offers businesses various loan programs, such as the SBA Microloan, being steered toward startups.
According to the SBA website, the SBA Microloan will provide up to $50,000 for startup capital, but the average amount for this loan is $13,000.
While this loan can offer startup capital to businesses that traditional lenders may not lend to, and you can use them for a wide variety of business expenses, they tend to come with strict spending requirements. It can take a while to get approved and receive your funds, have collateral requirements, and they can be challenging to qualify for.
A venture capitalist is a type of investor who will give a startup business capital in exchange for equity in the company. They tend to invest only in companies with high growth potential since they lose their money entirely if the business fails.
They can be suitable for new business owners since the investors have something to lose if the business fails, so they can act as a good consultant and offer guidance to help you succeed. Also, they may have connections within the business community that could benefit new business owners.
However, you could lose control of your business since they often require a hefty percentage of ownership of the company, with some being more than 50%. In this scenario, you could quickly lose the ability to make management decisions.
A small business grant is given to a person from the government, private businesses, or non-profit organizations that have gathered funds to gift to a new business owner. The key is finding one you qualify for, but competition is high even when you find a relevant grant option since it is one of the few options that do not require any repayment.
Most of these grants have stringent requirements, and some government grants require the business to repay the government in information rather than money. For instance, if research is involved in your business, you may be required to disclose your findings to the government for them to use as they see fit.
Through crowdfunding, you can raise funds for your business through an online campaign, but to receive donations, you usually have to offer an incentive to make it worthwhile. Many incentivize donations with a small share of the company, which can appeal to investors who cannot invest tens of thousands, but instead, maybe a couple of hundred dollars in a company.
This method has a few drawbacks, including that you can severely damage your reputation if your business fails, but even worse, you risk being robbed of your idea or product. Without a patent or copyright, anyone can go onto a crowdfunding site, see your idea, and claim it as their own.
Business credit cards are a great option to avoid many disadvantages that come with a traditional loan or investor, but only when used responsibly. With introductory 0% interest rates for upwards of 18 months, business credit cards allow you to avoid the interest rates tied to traditional loans, remain in control of your business, and do not require any assets as collateral.
A huge benefit is that there is no cap on how much funding you could receive, as long as you use the amount you have been given, show excellent payment history, and your personal credit remains in good standing. With this type of funding, since you are not giving up equity or putting up an asset as collateral, the banks use your personal credit to determine your creditworthiness – but do not worry because the business credit does not report or appear on your personal credit.
In the past, a significant drawback was that once the 0% introductory offer ran out, you would be stuck paying interest on the remaining balance. However, Fund&Grow found a way to prolong that 0% interest rate even after the initial offer has expired through credit stacking. As a result, we can keep startups at 0% interest for years after the initial offer through our done-for-you program, leaving virtually no drawbacks of this funding method.
There was a time when choosing the proper funding method required you to give up something and decide what was most important to you – the amount of funding, interest rate, or retaining complete control of your business. However, Fund&Grow has changed that to give you up to $250,000 in business credit at 0% interest without requiring you to give up anything, making it the most effective and affordable startup capital available today.
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For over 14 years, Fund&Grow has helped 30,000+ business owners get access to over 1.4 Billion dollars of business funding. We're on a mission to empower the small business owner by helping them tap into the smartest form of funding: Unsecured Business Credit – so that they can achieve their goals and dreams.
"Fund&Grow was created to empower small business owners, but more importantly, to support entreprenuers in achieving their business and personal goals while they lead the way towards innovation." - Ari Page CEO of Fund&Grow
Ari Page and the Fund&Grow team help business owners obtain access to credit despite the ambiguous lending climate. Many people feel ripped off and scammed by the bank bailouts and wonder why they can't use the system to their advantage the way the big banks did. If you have good credit, the Fund&Grow program will get you the funds you need to grow your business.
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All loans are subject to lender approval based upon credit criteria. $50,000 to $250,000 in business credit is for highly qualified clients over the term of the membership with multiple credit card batches and/or credit lines. Introductory rates of 0% apply to purchases and/or balance transfers after which it reverts to an interest rate, which varies by lender as disclosed in the lending agreement. Fund&Grow is not a lender.
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