As I mentioned in Part 1 of this piece, Get your business funded, this is a great time to get your business funded – something I’m actually surprised that I’m writing down on paper. After all, it wasn’t too long ago that the Not-So-Great Recession made finding and getting the money you needed for a business a very difficult task. But the silver lining of the recession is that new funding options came along as a result, and what we see today is a much more robust funding landscape.


Consider some of the many ways available today to fund your business:


Bank loans: As I like to say, banks want to lend you money. They are in the business of lending money. But more specifically, they want to make smart loans to responsible people, so you have to show your banker that a loan to you and your business is just that – a smart decision.


So that is where you start – meet with a banker early in the process. My friends here at Bank of America have hired a lot of small business bankers in the past few years, and I suggest that you meet with one in your neighborhood to get the process started. Many people wait until they think they have everything perfectly in place to meet with their banker. I would suggest a different method – get to know your banker early in the process, so they can guide you through it and perhaps suggest ways for you to improve so that you are an optimal candidate when the time comes to request a loan.


Credit cards: There are two ways to do this:

  1. Many entrepreneurs have funded their business using their own personal credit cards. The beauty of this is that you don’t need anyone else to say yes. As long as you have a solid plan for paying off the loan (to yourself) in a timely manner, this is a great way to go. The danger, of course, is when you don’t stick to that plan, and you put yourself – and potentially your family – into debt.
  2. If you have a business credit card, using that to fund your business is also a viable strategy for the same reason — you are free to use the card as you wish, when you wish. If you don’t have a business credit card, this should be a good reminder to get one.


Microloans: Maybe you need a smaller loan, or your credit isn’t great for whatever reason. In that case, you might want to consider getting a microloan. Depending on the institution, these loans can be very micro, or not so micro at all:


  • CDFIs (Community Development Financial Institutions): CDFIs are nonprofit financial institutions in various underserved communities that make small loans. A CDFI loan, for example, might be as small as $2,000 or as big as something in the hundreds of thousands. Google CDFI in your area to find some lenders near you.
  • Accion: Accion is another nonprofit that makes microloans to small businesses. I have heard of Accion loans in the hundreds of dollars, and of course, there are much bigger ones too.
  • Kiva: Kiva is a peer-to-peer lending platform that facilitates microloans between individuals and low-income entrepreneurs. Up until recently, Kiva worked mostly in third world countries, but it has now come to the U.S.
  • The SBA: The Small Business Administration also makes microloans up to $50,000.


Crowdfunding: Of the new funding mechanisms that resulted from the recession, crowdfunding tops the list. Using a platform like Kickstarter (or Indiegogo, or a hundred others), a small business can appeal to strangers to help fund the dream.


There are essentially two forms of crowdfunding. The first is equity-based, where you sell a piece of your company (the equity) to an investor for the funding you need. This is more challenging for most small businesses. The second is a rewards-based system, where you give someone a reward for their investment in your business. For example, a restaurant may name a dish after a crowdfunding investor in exchange for a $500 investment in the business.

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Angel investors: An angel is what it sounds like – a person willing to invest in your business. Angels come in all forms: everyone from a stranger you meet through networking to your best friend’s dad.


Whatever the case, angels all want to see the same thing: a plan for success. They want to know that they are making a smart investment. As such, you need to have some sort of business plan ready for them to see. As with a banker, your job is to show the angel that investing in you is the right move.


Partners: Maybe you don’t have the money, but a potential partner does. You can offer to team up using your idea and sweat in exchange for their money and partnership. Just be sure that you like working together and are on the same page about the vision and direction of the business.  I’d recommend trying a few projects together before partnering on a business.


Business plan competitions: Many communities around the country are now creating competitions with cash prizes in an effort to lure and incentivize entrepreneurs.  A Google search can help you find one in your neighborhood.


So yes, today there are a lot of ways to Get Your Business Funded.


About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.

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