Whether you’re looking to start a business or want to expand an existing one, finding the cash to do so can be tough. While the most traditional option is to go to the bank for a loan, there are many other choices that you may not know about.
To help you secure the capital you need for your business, we’ve
compiled a list of the funding resources that every entrepreneur should look
into.
Crowdfunding Sites
Crowdfunding has become more and more popular in the last few
years. These sites allow business owners to create a fundraising campaign
online and collect donations. Dozens of crowdfunding sites exist, but we’ll
highlight the most beneficial options.
1. Kickstarter
Kickstarter is the most popular crowdfunding site out there;
since its inception in 2009, the site has raised $1.7 billion dollars, which
funded 85,000 projects.
Like most crowdfunding sites, business owners create a profile
page that outlines the business and sets a fundraising goal. Those who donate
are promised some sort of reward, like being the first to try out the new
product.
However, it’s an all-or-nothing scenario on Kickstarter. In
other words, you have to hit your fundraising goal to keep the money. If you
fall short, your donors get their money back. Even if you do reach your goal,
Kickstarter takes five percent as a fee. Learn more about Kickstarter’s
guidelines here.
Kickstarter has the name recognition, but it also has a lot of
campaigns. Everything from art projects to business ventures are actively
competing for funding, so you’ll want to evaluate the site to make sure it’s
the right fit for your business.
2. Indiegogo
Another option for crowdfunding is Indiegogo. Similar to other
crowdfunding sites, you create a profile, tell your story, set a fundraising
goal, and ask for donations. However, Indiegogo’s fee structure is a little
different—it’s not an all-or-nothing scenario. Indiegogo takes nine percent of
your earnings if you don’t reach your goal, and four percent of your earnings
if you do reach it. Here’s the fee structure.
3. Crowdfunder
Crowdfunder is another crowdfunding option, but this site is
geared more toward entrepreneurial startups. It still runs on a fundraising
premise, but the site boasts a large pool of investors as its main audience. It
has a history of working with businesses and has some high-dollar deals under
its belt.
Its fee structure is different as well; rather than taking a
percentage of your earnings, Crowdfunder charges a monthly fee of $299.
4. Onevest
Onevest takes Crowdfunder one step further. This site vets both
small business owners and investors before anyone can ask for or accept money.
The idea is that everyone who participates is serious; there aren’t any
half-thought-out business projects or tire-kicking investors.
You create a profile page to intrigue investors, but Onevest
also sends investors and owners introduction emails to open the lines of
communication. Fundraising goals are typically higher than you’d find on other
crowdfunding sites. You wouldn’t go to this site if you want to raise $1,000, you’d
turn to this site if you’re looking to launch your company and need $10,000+.
Onevest takes a 7.5 percent cut of the funds raised. Plus, there
are some high fees for the company to investigate your business. You’ll want to
look into the fees before you move forward.
5. Business USA
Let’s start with a website that functions like a grant search
engine. On the Business USA website, you work through a series of five
multiple-choice questions and the site gives you a list of possible grants at
the federal and state level that apply to your business.
There are thousands of grant options out there, but most have
specific purposes and qualifications. For instance, many of the federal grants
listed on this site focus on minorities, disaster relief, and farming
assistance. The state grants are also specific. For instance, the Delaware
Brownfield Assistance Program offers funding for a small business that plans to
develop environmentally distressed areas in the state.
It may take some time to find a grant that fits your business
needs, but that shouldn’t discourage you from looking.
6. National Association for the Self-Employed Grants
Since 2006 the National Association for the Self-Employed has
given out $650,000 in grant money. Applicants can receive up to $4,000 and must
use the money for marketing, advertising, hiring employees, or expanding
facilities. You do have to be a member of the association to apply, which costs
$120 a year.
7. Small Business Innovation Research Program
One of the more lucrative federal grant programs is the Small
Business Innovation Research Program, which helps businesses with research and
development projects.
The program, which is coordinated through the U.S. Small
Business Administration, offers several kinds of grants: open, closed, future,
and solicitation listing. You’ll want to research which option is best for your
company.
Expect a lengthy qualification process and, if selected, a
strict measurement plan to ensure the money is going to good use.
8. Amber Grant for Women
Female business owners can take advantage of the Amber Grant.
This grant was launched in 1998 by Womennet to help entrepreneurs succeed. Each
month, one woman is selected for a $500 grant. At the end of the year, one of
the winners is selected for a $2,000 grant.
It’s a simple application process. You just have to answer a few
short-answer questions through an online form and pay a $7 application fee.
Peer-to-Peer Lending
It’s not always easy to explain your business concept to a
banker, but explaining it to your peers is a whole different concept. A lot of
startups chose to borrow money from their peers, but rather than asking your
college buddy to cough up a few grand, try these websites instead.
9. Prosper
Prosper is a well-known peer-to-peer lending site. It has the
name recognition in the field, with $3 billion given out in loans.
With this resource, you’re give an interest rate based on an
evaluation. You create a loan listing so investors can see what you’re all
about and what you need the money for. Once an investor commits to funding your
loan, you’ll get the cash and set up a payment plan. Rates start around seven
percent, but can go as high as 35 percent.
10. LendingClub
If you’ve been in business for a few years, but need some additional
capital, check out LendingClub. With LendingClub, loans are financed through
investors. You need two years of business history, at least $75,000 in annual
sales, and have a good personal credit score. There’s a five-year cap to pay
back your loan, and as with any loan, you’ll face interest rates and additional
fees.
11. Funding Circle
Funding Circle connects your small business with investors.
Loans range from $25,000 to $500,000; you’ll speak with a loan manager who will
walk you through the process, and you could get funding within two weeks.
Interest rates vary from six to 20 percent, depending on how
quickly you pay back the loan. Plus, there are origination fees and late fees
if you miss a payment. Check out the rates and fees before you apply.
Loans
If you’re looking for an alternative way to secure a loan, check
out these online options.
12. Kabbage
In need of some quick cash? Kabbage can help. This online site
can offer you a line of credit ranging from $2,000-100,000. Unlike traditional
banks, Kabbage evaluates things like your eBay account and QuickBooks records,
rather than your credit score. There are some unique fees that Kabbage employs,
so you’ll want to do your homework before applying.
13. SnapCap
SnapCap allows small business owners to borrow money for general
purposes, which allows for a lot of flexibility. From expansion plans to
equipment needs, SnapCap can help you finance it. You’ll need at least $1,000
in the bank, at least one year in business, and you must have $100,000 in
annual sales to prequalify. Unlike a bank, the approval process can happen
within 24 hours. As always, check out the interest rates and fees.
14. FundBox
If your startup is in a cash crunch, you could qualify for a
short-term loan from FundBox. You create an account and enter your outstanding
invoices, and FundBox will give you the money for your outstanding invoices, so
you don’t have to wait for clients to pay. Here’s the fee structure.
BlueVine is another site that does the same thing, with slightly
different fees.
15. AngelList
Startups create a profile on AngelList and administrators pair
your startup with like-minded investors and make an introduction via email.
Your profile is similar to a social page. There’s an activity
feed and you can interact with others on the site. It’s important to keep an
updated profile on the page so investors always have the best information
available as they browse the site.
AngelList is a little more complicated than a social media site
or a crowdfunding profile. Forbes has an article on how to navigate the site
and get results.
16. Gust
Similar to AngelList, Gust connects startups with investors. The
platform allows for owners and investors to get to know each other and discuss
funding, and all conversations and possible deals are tracked through the
platform.
This site also functions like a social network, where you can
interact with investors and build relationships through a secure channel.
All of the startups and investors are vetted, so it’s a serious
choice for startups looking to court financial backers.
17. Love Our Local Business
If your business is in need of some marketing help, you can
check out the Love Our Local Business Sweepstakes sponsored by Intuit. The
sweepstakes gives 15 businesses a $5,000 marketing package. You have to write
about your business and get people to vote for your business through social
channels, but the application process is fairly simple. Check out the
guidelines to learn how to apply.
18. Mission Main Street Contest
Chase hosts a contest each year that gives entrepreneurs a
chance to win grants, and twenty business owners will take home $100,000. In
addition to an application, there’s a social media component to the application
process.
19. Hatch Pitch
If you’re creating a product or service based on innovative
technology, you can pitch your idea during Hatch Pitch, an event that takes
place each year at the South by Southwest (SXSW) event. You have four minutes
to pitch your startup to judges. Learn more about how it works on the Hatch
Pitch site.