Top 10 Places to Find Money to Start a Business

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Of all the small businesses that fail, 82 percent of them fail due to a lack of cash flow.

Do you want to prevent your business from being part of that majority?

Whether you’ve already started your business or are struggling to get things going, you need to make sure you have adequate capital.

If you’re not sure how to get capital for business, keep reading. Listed below are ten great ideas you ought to consider.

1. Talk to Friends and Family

Having conversations with friends and family members about your finances can be awkward, for sure. In most cases, though, it’ll be a less awkward conversation than the one you’d have if you had to tell them that your business closed its doors or never got off the ground.

When asking friends or family members to borrow money, be sure you have clear terms laid out to pay them back. This will help them to feel more secure about giving you the money, and you’ll be able to avoid a lot of awkward “so, when are you paying me back?” conversations later on.

2. Find an Angel Investor

Angel investors are wealthy individuals who are looking to invest in startup companies. Usually, in exchange for their investment, they will require an equity stake in your company.

Angel investors can be hard to track down. However, if you do a bit of research, you may be able to find someone in your area or online who’s willing to give you the money you need if you’re willing to allow them to become a partial owner of your company.

Angel investors can also offer a lot of guidance to help you keep your doors open, so they’re a great option to consider if you don’t mind giving up partial ownership.

3. Apply for a Grant

There are lots of grants out there designed to help small businesses grow and thrive.

Some of these grants are offered by government agencies, but there are many others offered by other businesses and professional organizations.

You never know what kind of free money is available to you, so it’s always worth digging to see if you qualify for any grants.

4. Try Crowdfunding

Crowdfunding through sites like Kickstarter and IndieGoGo can be a useful option, especially if you have a product that you think people will be excited about.

Crowdfunding is also useful because it gives you an opportunity to connect with other business owners and market your business idea. The more exposure you can get in the early stages, the easier it will be for you to grow your business and secure the funding you need.

5. Use Your 401(k)

If you have a 401(k) from a former (or current) employer, you may want to tap into that money to help fund your business venture. This is known as a Rollover as Business Startup.

When you take this approach, you get to roll over your retirement funds into a new retirement account that acts as a shareholder in your business.

You must work with a professional if you decide to do this. If you get it wrong, you could end up paying some hefty taxes and IRS penalties.

6. Apply for a Small Business Loan

Of course, you can also apply for a small business loan.

SBA (Small Business Administration) loans are some of the most common options. They’re backed by the government, so lenders are more willing to approve applications for them compared to other loans.

The catch, though, is that the application process is quite lengthy.

7. Apply for a Home Equity Loan

If you own your home, a home equity loan could help you get the money you need. Basically, you’ll work with your lender to borrow money against the equity you’ve accrued in your house.

These loans often have lower interest rates and better terms than a lot of other loan options.

8. Talk to a Venture Capital Firm 

A venture capital (or VC) firm will make a direct investment in your company in exchange for an equity stake.

VC firms are very selective about which businesses they work with. In most cases, they’ll want to see that you’re already profitable before they’ll give you the money you need.

However, it is worth a shot to reach out, especially if you’ve been in business for a few years and need additional financing to continue growing.

9. Find an Incubator

If you’re in need of a lot of money for your business and are still in the early, developing stages, getting involved in an incubator might be something worth considering. 

Incubators provide businesses with the support and resources they need to develop their ideas and grow into a profitable company. These resources include things like financing, marketing advice, networking opportunities, and infrastructure.

If you want to get involved with one, you’ll need to go through a lengthy application process. It can be worth it, though, to get the support your business needs.

10. Apply for a Personal Loan

You can also look into applying for a personal loan from a bank or credit union.

If you think your credit score isn’t high enough for you to get a loan from a traditional lender, there are also a lot of personal installment loan companies out there that you may want to consider.

According to these Speedy Cash reviews, working with an installment loan company can help you secure the capital you need sooner. You may also be able to get better interest rates and terms when you work with them over a traditional lender.

Bonus: Consider Selling An Annuity

If you’re looking for a less conventional yet potentially lucrative way to generate capital for your business, consider the option to sell an annuity. Selling an annuity can provide a substantial lump sum of money, rather than waiting for periodic payments over years. This can be particularly advantageous if you need a significant amount of capital upfront to cover start-up costs or to invest in crucial business growth activities. Before deciding to sell your annuity, it’s important to consult with a financial advisor to understand the implications, including potential taxes and fees, and to ensure that this move aligns with your overall financial goals, but it certainly is an option if you have the next big idea.

You Know How to Get Capital for Business: What’s Next?

Figuring out how to get capital for business can seem like a daunting task. This is especially true when you’re in the early stages of starting your business and both your funds and your contacts are pretty limited.

As you can see, though, you have plenty of options to consider that will help you secure the capital you need to get your business off the ground and keep it afloat.

Do you need more business advice? Whether it’s about finances, marketing, or anything in between, we can help. Head to the Business section of our site today to get started.