How to Seek Funding for Your Business
Learn about the many different funding options available to you, and how to get them.
Have you ever wondered how to turn your dreams of owning your own business into a reality? We can help. Each week, as part of our Self Made series, we showcase female entrepreneurs—as well as their quality, handmade goods—and share their best advice related to starting, maintaining, and growing your own business.
When it's time to fund your business, you have many more options than simply heading to the bank. "As with all of technology, the lending space has evolved significantly," explains Rania Succar, vice president of QuickBooks Capital and Payments. "There are myriad ways to secure business funding available literally at your fingertips," from crowdfunding to grants and more. Here, we dive into the many different funding options available to you, and how to get them.
You've likely heard of crowdfunding—which Succar defines as a "method of raising capital through the collective efforts of family, friends, customers, and other individual investors"—thanks to sites such as Kickstarter, GoFundMe, or Indiegogo that have popularized the method. Succar says crowdfunding can be ideal for business owners with a longer timeframe for raising money, and particularly for those with a large online network. Crowdfunding sites "can also help to generate a lot of buzz around your business, which is an added bonus," according to Succar.
However, when picking the platform you'd like to crowdfund on, be careful: There are 300-plus platforms to choose from in the United States alone. "Each platform focuses on specific types of ventures, so it's important to consider the platforms successful track record of funding campaigns for business ventures," says Kedma Ough, business funding expert and author of Target Funding: A Proven System to Get the Money and Resources You Need to Start or Grow Your Business.
Peer-to-Peer or P2P lending "is the practice of lending money to businesses or individuals via an online website," says Succar. To seek this kind of funding, "a business owner would register herself on the site, request the amount she needs along with the maximum interest rate she wants to pay—and then potential lenders bid on her loan." It's not for everyone, but "it's a good option for business owners who want to dictate the terms and amount of their loan directly," she says.
When you take money from a firm or a private investor and give a piece of your company to that firm or person, that's venture capital. "Venture capital involves a business owner taking funding from a firm or individual, but also agreeing to giving that party equity in the company as a result of the initial investment," Succar explains. This might not be an ideal option for you if you want 100 percent control of your company: Accepting venture capital "means the investor will have a say in future company decisions," Succar explains. But, it's a good option for some: "This is most appropriate for small businesses that have high, long-term growth potential," Succar says.
There are general small-business grants as well as grants specifically for women-owned small businesses, says Ough. "While they are usually in short supply, often available for a limited period of time, and competitive, the opportunity to receive free money is still worth the time spent searching and applying for grants," she says. "An example of a grant for women is the Girl Boss Foundation, which offers two $15,000 grants per year for entrepreneurs pursing a venture."