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Small businesses have always had to be creative in finding new ways to bring in enough funding to survive in this market. Lately however, they have had more obstacles to surmount mainly due to the current pandemic, and unfortunately many did not survive. During the quarantine, they had to become innovative to avoid going under, even if all they were doing was breaking even. After contributing more than 43 percent to the annual GDP of the country last year and 48 percent the year before that, the country is optimistic about the numbers going back up now that the vaccine against the corona virus has been released.

Before even considering which of the many available sources of funding to pursue, there a few steps one should take to figure out the current health of their business and to determine how much help they require. The key steps to take are first knowing the numbers, then determining what areas need help along with deciding how much help is needed and finally doing all the necessary research to select the best source of funding for the business. Knowing exactly which areas of the business are suffering will help tremendously in determining the funding research method.

Before even considering which of the many available sources of funding to pursue, there a few steps one should take to figure out the current health of their business and to determine how much help they require. The key steps to take are first knowing the numbers, then determining what areas need help along with deciding how much help is needed and finally doing all the necessary research to select the best source of funding for the business. Knowing exactly which areas of the business are suffering will help tremendously in determining the funding research method.

First, the owner can consider taking out a loan. There are many loans available on the market, one should always shop around to find the most suitable one. The most popular loans available to small business owners is an SBA loan, there are also term loans or business line of credit or simply credit cards that one could get. Some of the basic requirements for loans are a good personal credit score (550 & up), a business with at least 6 months history and a good commercial cash flow.

Next, one could look at grants. The main advantage of a grant is that they are free and are available to everyone. However, the competition is quite fierce, and the resources are scarce. It usually takes months to compete for a grant, but victory is not guaranteed. The best option for finding most federally sponsored grants is  Grants.gov, but for private grants, google is the best bet.

Our third option is crowdfunding. Crowdfunding is the practice of funding a project or venture by raising small amounts of money from people, typically via the internet. When one decides to turn to crowdfunding, rather than looking for investors, the investors come to them. Obviously, small business owners will have to be extremely convincing to attract enough people, but it really pays when it succeeds. The best way to attract people is to offer rewards in exchange for a donation. Crowdfunding websites usually have fees associated with their use so it would be wise to always check how much they might be charging for their services. Crowdfunding may also not be appropriate for all business owners; they usually have more success with creative product-based businesses

The next funding option available is the use of personal assets. They are some of the most common and advantageous source of funding for small businesses. The biggest advantage of using personal assets as a source of funding is the option it gives the owner to avoid taking on risky debts. There is no need to worry about interest rates, APRs or credit scores. There is also the possibility of getting help from friends and family whether in the form of an investment or a gift.

Finally, our last option is reaching out to angel investors. An angel investor is a person who invest their own money into the business, generally in exchange for a percentage of shares in the company. This usually means that there is no loan to repay and instead the investor shares the profits of the company. However, an angel investor cannot be anybody willing to invest in the business but rather an accredited (by the SEC) investor whose net worth is over a million dollar or who makes roughly $200,000 or more per month. The best way to find angel investors is to either go on the TV show “Shark Tank” or to pitch business ideas at angel investing clubs.

With all the resources at our fingertips, it is very easy for small business owners to find new ways to fund their businesses, even if lately some of those sources seemed to have dried up or been closed off because of the risk carried by the investments. The best that can be done is to focus on being innovative to keep the business open and eventually, once the pandemic stops, the world will adapt a new normal, which in turn would stabilize the current economy and create new and different ways to fund businesses worldwide.

                                       References

  • Goodshore, C. (2020, December 17).
  • Best Small-Business Funding Options 2021.
  • Retrieved from www.business.org/: https://www.business.org/finance/loans/best-small-business-funding-options/
  • Scott, G. (2019, September 30).
  • 10 small business funding options — from angel investment to traditional loans.
  • Retrieved from godaddy.com: https://www.godaddy.com/garage/small-business-funding-options/#:~:text=%2010%20small%20business%20funding%20options%20%E2%80%94%20from,business%20financing%20via%20angel%20investment.%20Unlike…%20More%20

 

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