10 Places to Find Startup Funding for Your Business

Getting the money needed to start a business takes work. But that doesn’t mean that financing isn’t available. The key is knowing where to look for the money you need. To give you somewhere to start, I compiled a list of ten places to find startup funding for a small business. There are pros and cons to each offering, but they are all worth considering:

Your savings account. Entrepreneurs often take money from their savings for initial startup funding. This is a great idea. When you use your own money, you don’t have to worry about paying anyone back right away. However, if you decide to go this route, you’ll want to make sure you “lend” the money to the business and pay yourself back later–with interest.

Family. Borrowing money from family to start a business is a time-honored tradition among entrepreneurs. Interest rates are often lower and terms can be much more flexible–especially if you have a rich uncle who doesn’t need the money repaid immediately. And if you pose the deal as a win-win situation (i.e. you agree to pay your lender more in interest than a bank would if the money was just sitting in a savings account), you may be able to get the majority of your funding from a private business loan.

Your network. Relatives aren’t the only people to turn to when you need startup fuel. Friends, mentors, business associates, and other people who are in your network can also be considered viable options. Just be careful who you borrow from in a downturn. You don’t want to take money from anyone who is counting on being repaid immediately.

Angel investors. Also known as strangers with money, angel investors use their cash to help aspiring entrepreneurs like you get started in business. These investors can be found in every industry. Some join together to form associations and syndicates. You can find an angel investor in your area by visiting Angel Capital Association online or by doing a simple Google search. One word of warning though: some angel investors are really scammers in disguise. Do not ever pay anyone to simply listen to your pitch. A real angel or angel group will do this for free. It’s important that you invest some time to prepare a startup pitch deck.

Seed funding firms. Also known as “business incubators,” seed funding firms are similar to angel investors. They give entrepreneurs startup money and expect to be paid back at a later time. But, unlike angel investors, seed funding firms do not do this sort of thing on the side; helping startups is their main business. You can find seed funding firms by doing a Google search.

Local funding. Looking for funding within your local community is just plain smart. There are many local government agencies and non-profits that have community development programs. These programs sometimes offer grants or other types of funding to new businesses. In many cases, there are even special programs for entrepreneurs who are women or minorities.

Government grants. Although it can be incredibly difficult to find straight-out grants from the state or federal government to start a business, there are a few grants available. In most cases, these grants are reserved for non-profits and other businesses that provide some sort of public benefit. If your business venture falls into that category, you may be able to get one of those elusive grants. Visit business.gov and sba.gov for reputable grant resources.

Your bank. If you’re like most entrepreneurs, you probably want to avoid taking out a loan to fund your new business. Unfortunately, this might not be the most realistic approach. Bank loans are sometimes necessary to get things going. If you do need a loan, consider contacting the financial institution you bank with on a regular basis. Your bank knows you and has a business relationship with you. They may be much more willing to give you money than a bank that doesn’t have a standing relationship with you. And if things go sour, your local community bank may be easier to work with than some alternatives.

Social lenders. Also known as social finance companies, social lenders match borrowers who need money and investors who are looking for a fixed rate of return. Some of these lenders are backed by credit unions and other institutions. Nearly all of them are a win-win for the borrower and the lender. The most prominent social lenders operating today include Zopa and Prosper.

Small business financing alternatives. Because small business loans can be difficult to get if you don’t have the right capital or the right credit rating, you may need to look at a business financing alternative. A number have cropped up in recent years. The best example is probably On Deck Capital, a company that uses cash flow to determine loans versus tax returns or credit ratings.

Guest post submitted by Karen Schweitzer.

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