funding funding

A Beginner’s Exclusive Guide to Funding and Financing Options for Newbies

Securing funding is a pivotal step for new entrepreneurs, and to uncover effective strategies, we’ve gathered insights from founders and CEOs. From exploring SBA loan programs to negotiating vendor financing, dive into the diverse experiences and advice of twelve seasoned professionals on accessing funding and financing for your business in the US.

  • Explore SBA Loan Programs
  • Leverage Crowdfunding Platforms
  • Seek Out Angel Investors
  • Embrace Bootstrapping Strategy
  • Utilize Peer-to-Peer Lending
  • Utilize SBA Resources
  • Compete in Startup Contests
  • Use Business Credit Cards
  • Apply for Government Grants
  • Pursue Venture Capital Funding
  • Join Local Incubators
  • Negotiate Vendor Financing

Explore SBA Loan Programs

Mark Buskuhl, Founder and CEO, Ninebird Properties

Mark Buskuhl, Founder and CEO, Ninebird Properties

The Small Business Administration (SBA) has you covered with a range of loan programs for new entrepreneurs in the US. These loans are much more accessible than those from traditional banks because they’re backed by the government and have lower interest rates. 

Depending on your needs, you can apply for different types of SBA loans, like the 7(a) loan, microloan, or CDC/504 loan. To get an SBA loan, just work with a local lender who’s part of the SBA’s Preferred Lender Program (PLP)—it makes the application process a breeze. And hey, don’t forget to make use of the SBA’s resources and counseling services to prepare for your loan application.

Leverage Crowdfunding Platforms

Shaun Martin, Founder and CEO, Sell My House Fast

Shaun Martin, Founder and CEO, Sell My House Fast

Crowdfunding has become a super-popular way for new entrepreneurs to get funds for their businesses. You basically reach out to a bunch of people online and ask them to chip in a little bit towards your awesome business idea. It’s a great way to access funding and connect with potential investors and supporters who dig what you’re offering. 

Plus, it’s also a way to validate your business idea because people are showing interest by putting their money where their mouth is. Some cool crowdfunding platforms in the US are Kickstarter, Indiegogo, and GoFundMe.

Seek Out Angel Investors

Brandon Beatty, Founder and CEO, Southern Hills Home Buyers

Brandon Beatty, Founder and CEO, Southern Hills Home Buyers

Angel investors provide a viable avenue for aspiring entrepreneurs to secure funding and financing for their U.S.-based businesses. Angel investors are individuals or groups of high-net-worth individuals who provide capital for startups or early-stage businesses in exchange for ownership equity. 

Angel investors can be discovered at networking events, startup incubators, and accelerators, as well as on online platforms like AngelList. They often invest in businesses that align with their personal interests, experience, and values. Aside from providing capital, angel investors also bring valuable knowledge, expertise, and connections to the table. They can act as mentors and advisors to new entrepreneurs, offering guidance and support throughout the growth of the business. 

However, it’s important for new entrepreneurs to thoroughly research potential angel investors before approaching them for funding. They should ensure that the investor’s values and goals align with their own, and be prepared to give up a portion of ownership in their business in exchange for the funding.

Embrace Bootstrapping Strategy

Mark Damsgaard, Founder, Global Residence Index

Mark Damsgaard, Founder, Global Residence Index

With bootstrapping, you build a business with minimal external funding. You rely on revenue generation and reinvestment. Instead of seeking external funding, you focus on providing products or services that customers are willing to pay for, aiming for sustainable growth.

This approach fosters financial discipline and shows a high level of commitment to your business. It’s a self-sustaining model that allows the business to scale organically.

Utilize Peer-to-Peer Lending

Danielle Roberts, Co Founder, Boomer Benefits

Danielle Roberts, Co Founder, Boomer Benefits

A distinctive approach for new entrepreneurs in the U.S. to secure funding is by exploring peer-to-peer lending platforms. These platforms connect borrowers directly with individual lenders willing to provide loans at competitive rates. 

Entrepreneurs can pitch their business plans and funding needs to a network of individuals willing to invest in their ventures. This method bypasses traditional financial institutions, offering a more personalized and potentially more accessible way to obtain capital for business endeavors.

Utilize SBA Resources

Stefan Campbell, Owner, The Small Business Blog

Stefan Campbell, Owner, The Small Business Blog

It is something I harp on constantly with entrepreneurs and new small businesses. If you are starting a business in the United States, the Small Business Administration should be your first stop. 

For any entrepreneur or small business embarking on a start-up journey, a treasure trove of resources exists within the SBA. While they are often unnoticed, they can prove incredibly valuable for emerging ventures.

Entrepreneurs have to self-educate and self-advocate when launching their business. Delving into available support avenues tailored specifically to them is a start but can be overwhelming.

From LLC setup guidelines to crafting a comprehensive business blueprint, the SBA website hosts a plethora of indispensable information for small business owners and entrepreneurs. Exploring the SBA’s offerings should rank among the initial steps on your entrepreneurial journey toward business ownership.

Compete in Startup Contests

Aiden Higgins, Senior Editor and Writer, The Broke Backpacker

Man with Sunglasses and Backpack

Any entrepreneur knows that a dynamic idea is not enough to secure financing for their business venture. While there has been that one-in-a-million invention that investors simply cannot pass up, there are some great methods to secure entrepreneurial capital.

As a professional in the travel industry, I know how important it is to be that diamond in the rough. That is why my favorite means for a business owner to access funding for their company are start-up competitions for entrepreneurs.

These events allow a person to present their business ideas to a panel of open-minded investors to get informative feedback, public exposure, and a desired investment from a business-savvy professional (or two). With this method, entrepreneurs must be prepared to offer up ownership percentages, and participants must find the most beneficial contests to take part in.

Overall, I believe such competitive measures are what speak to a true entrepreneur in the first place. So why not use that trait to their advantage and find some networking (and hopefully profitable) success along the way?

Use Business Credit Cards

Bradley Fry, Owner, PinProsPlus

Bradley Fry, Owner, PinProsPlus

Business credit cards: Applying for a business credit card can provide you with a revolving line of credit to fund your business expenses. Business credit cards often come with rewards programs, introductory 0% APR periods, and other benefits that can help you manage your cash flow and build your credit history. 

However, it’s important to use business credit cards responsibly and pay off the balance in full each month to avoid high interest charges.

Apply for Government Grants

Tim Allen, Director, Oberheiden P.C.

Corporate Executive Portrait

The federal government of the United States provides a variety of grants and programs to assist small businesses. Common examples include the fields of technology, research, and social entrepreneurship. 

Local Small Business Development Centers (SBDCs) offer assistance, and websites such as Grants.gov provide a list of available grants. One major selling point of grants is that they do not need to be repaid. However, there is a lot of competition for these opportunities, and you’ll need to be prepared to submit lengthy proposals and follow strict rules. It is critical to stay updated on the requirements and due dates.

Pursue Venture Capital Funding

Kate Cherven, Marketing Specialist, United Site Services

Kate Cherven, Marketing Specialist, United Site Services

Securing venture capital from investors proves instrumental for nascent entrepreneurs navigating the competitive landscape of the US business scene. This avenue facilitates substantial financial injections that can catalyze the growth trajectory of a startup. Investors, drawn by the prospect of substantial returns, inject capital into businesses with high-growth potential, allowing entrepreneurs to access resources critical for scaling operations. 

By aligning with venture capitalists, entrepreneurs not only gain the financial backing needed for product development, market expansion, and talent acquisition but also benefit from the strategic guidance and industry insights provided by seasoned investors. This symbiotic relationship fosters an environment where risk is shared, fostering a collaborative effort towards business success. 

Embracing venture capital as a funding mechanism enables entrepreneurs to tap into a network of experienced professionals, leverage industry connections, and propel their enterprises toward sustained growth in the dynamic landscape of the US market.

Join Local Incubators

Eric Novinson, Founder, This Is Accounting Automation

Eric Novinson, Founder, This Is Accounting Automation

Some U.S. cities have their own incubators that provide financing, grants, and advice to startups that are established there. Consider looking for one of these incubators if you plan to set up a company in the U.S.

Negotiate Vendor Financing

Ben Lau, Founder, Featured SEO Company

Ben Lau, Founder, Featured SEO Company

One way a new entrepreneur can access funding and financing for their business in the U.S. is through vendor financing. This approach involves negotiating with suppliers or vendors to provide financing options, such as extended payment terms or equipment leasing, to support the business operations. 

By leveraging established relationships, entrepreneurs can secure favorable financing terms that may not be readily available through traditional sources. For example, a clothing boutique owner can negotiate with their clothing manufacturers to extend payment terms, allowing them to sell the inventory before fully paying for it. This reduces the need for large upfront capital and improves cash flow for the business.

Last Updated on January 11, 2024 by Mehar Jolly

Author

Leave a Reply

Your email address will not be published. Required fields are marked *