How to Fund Your Startup Business

One of the most challenging aspects of starting a business is acquiring funding. If you aren't independently wealthy or don't know someone who is, you might feel like you are limited in your ability to pursue your entrepreneurial dreams. In fact, there are many sources that can help you finance your startup. You just need to know where to look.

Take Out a Personal Loan

Your first thought might be to take out a business loan, but what you will quickly learn is that these are generally available for businesses that already exist. However, if you have good credit and an existing relationship with a credit union or bank, you may be able to take out a personal loan. The amount you can get from a personal loan is smaller than what you can get from a business loan and you will have more personal liability, but it can give you the money you need to get started. Online lenders such as Earnest.com offer loans with favorable rates with a quick approval process.

Self-Funding

This is sometimes known as bootstrapping. You don't actually have to be wealthy to finance your own business. Remember those stories you've heard of startups begun in college dorms or garages. Many people use credit cards, savings accounts and money from family and friends to get started. However, there are a few dangers inherent in this approach. You need to be able to afford to lose the money that you put up. You should also remember that if you do not have a plan to pay back friends or family who loan you money, this could affect your relationship with them. If you do borrow money from them, you may want to write a short agreement in which you agree on a time frame for repayment and perhaps even pay back with interest. Another possibility is starting the business part-time while you are still at your full-time job and using money from your job to fund the business.

Crowdfunding

Crowdfunding platforms may provide some of your startup money. Crowdfunding requires a lot of legwork and raising awareness on your part, but it is also a great opportunity to get public interest in your business from the outset. Some people have run particularly successful crowdfunding campaigns, and you should take a look at what has worked within your industry before launching your own. You may even attract venture capitalists along the way.

Angel Investors and Venture Capitalists

These may be possibilities if your idea is tech-based and you have the networking and presentation skills. Venture capitalists tend to provide more than angel investors, but you may also be turning over some control of your business to both types of investors. Both are good sources if you need larger sums of money than you can get elsewhere and you have an eye-catching idea. Angel investors and venture capitalists are not the right source for everyone or every business idea, but if you find the right match, they can be one of the best ways to they money you need.