Resources and Tips / Best Places To Look for Funding as a Small Business Owner
Best Places To Look for Funding as a Small Business Owner
By SME Institute
If you’re a small business owner, then you know that one of the most difficult aspects of running a business is finding the funding to get it off the ground. You might have a great product or service, but without the financial backing to bring it to market, your business will never get off the ground. Luckily, there are a number of places where you can look for funding as a small business owner. In this blog post, we’ll take a look at some of the best places to look for funding for your small business.
Family and Friends
One of the first places many small business owners look for funding is their family and friends. If you have a close network of people who believe in your business, they may be willing to invest money in your venture. Just be sure to draw up a contract and treat them like any other investor.
Savings
If you’re not comfortable asking your loved ones for money, you can always fund your business with your own savings. This option may not be available to everyone, but if it is an option for you, it’s worth considering. Just be sure you have enough left over for personal expenses and emergencies.
Credit Cards
Credit cards can be a great way to finance a small business, especially if you have good credit and can qualify for a low interest rate. However, this option can be risky because if you’re unable to make your payments, you could end up with a lot of debt. Use this option responsibly and only charge what you can afford to pay back.
Banks and Credit Unions
Banks and credit unions are another popular source of funding for small businesses. While they may be more hesitant to give you a loan than family and friends, they may be more likely to give you better terms— low-interest rates, for example. RBC is a good place to start, offering a wide range of flexible business loans and credit lines to suit your needs.
Government Grants
There are a number of government grants from both the federal and provincial and territorial governments available for small businesses, especially if your business is in a niche industry or serves a social good. Doing some research on government grant programs that might be applicable to your business is well worth your time—grants don’t have to be repaid, so they’re essentially free money. Start your search at the Government of Canada’s portal for small business grants here.
Crowdfunding Platforms
Crowdfunding platforms like Kickstarter and Indiegogo allow businesses to raise money from a large number of people in small increments. With crowdfunding, businesses can pre-sell products or services, offer rewards for certain donation levels, or let donors invest in return for equity in the company. Crowdfunding is a great way to raise seed money for your small business without giving up equity or taking on debt.
Angel Investors
Angel investors are individuals who invest their own money in startups and small businesses. Angel investors typically invest smaller sums of money than venture capitalists, but they don’t always require a return on their investment as quickly. If you’re looking for funding from an angel investor, you can try pitching them on your business idea directly or attending startup events where they might be in attendance. Some cities even have groups of angel investors that pool their resources and make investments together.
Equipment Financing
If you need funding to purchase equipment for your business, equipment financing may be a good option for you. With this type of financing, the equipment itself serves as collateral for the loan so that lenders are less risk-averse when it comes to approving the loan.
Vendor Financing
Many vendors offer financing options when purchasing their products or services on credit. This can be a good option if you have good credit and relationships with vendors who are willing to extend financing terms to you.
Small Business Incubators
Small business incubators are organizations that provide resources and support services to help new businesses get off the ground and grow. Depending on the specific incubator, they may provide office space, mentorship opportunities, access to mentors and experts in various fields, and even financing options. While not all incubators are created equal, they can be a great resource for small businesses looking for guidance and support as they navigate the early stages of starting a business.
Raising money is one of the hardest parts of being a small business owner, but luckily there are lots of options available depending on your needs and preferences. Be sure to consider all your options carefully before making any decisions and remember that there is no “one size fits all” solution when it comes to financing your small business. The best bet is usually some combination of different sources depending on what’s available to you. If all else fails, remember that plenty of businesses have been built from scratch with nothing but sweat equity! You might just have to get creative.