Wednesday 28 April 2021

Top 6 Best Sources of Startup Funding in 2021

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With a lack of business history, substantial revenue, and established credit, it can be much more difficult for startups to access funding in comparison to established businesses. This doesn’t mean, however, that you won’t be able to find startup funding for your new business.

Startup funding for small businesses is particularly elusive—as most traditional business loans require one or more years in business—but that doesn’t mean it’s impossible to get your hands on.

1. Friends and Family

What if you don’t qualify for any of these startup business loans but you don’t want to rely solely on a business credit card for your startup business funding? The Minority Business Development Agency provides a helpful guide for borrowing startup money from your friends and family, so consult their advice before opting for this potentially risky form of startup funding for small business entrepreneurs.

You might want to consider going to friends and family to fund your startup. If you decide to go for this business startup funding option, though, then you should be sure to systematize this traditionally less-formal form of debt.


2. Personal Loans for Business

For entrepreneurs with very strong personal credit and a new business idea that you feel really good putting your own finances on the line for, a personal loan for business might be worth considering. That said, here is the disadvantage—and this is important: When you take one of these loans out for your business, the lender is entering into a contract with you as an individual—not with your business.

Consider generally, a personal loan will tend to have lower interest rates as well as easier repayment terms than its business counterpart—and it can also be used for nearly any purpose. These options have the advantage of being simple: No hidden fees, no fancy formulas, just a basic personal loan.

3. Invoice Financing

This form of startup funding will rely on your business already having at least one invoiced customer, but many invoice financing companies will require you to have very little time in business to be eligible for funding.

Another funding option that you’ll be able to access with little-to-no time in business is invoice financing. Through invoice financing, you’ll be able to access an advance for a portion of your business’s outstanding invoice value.


4. Equipment Financing

Equipment financing for startup businesses is particularly apt for your situation because of its self-secured nature. If you need startup funding to purchase equipment, then consider equipment financing a top option for funding your venture. Because the equipment you purchase will act as collateral for the very funding you use to purchase it, equipment loans will be easier to qualify for, even if you don’t have much time in business.

For instance, Currency Capital is one of the best equipment lenders out there, and they don’t have a minimum time in business requirement. Though many equipment lenders will have minimum requirements for time in business, a fair amount won’t have a time in business requirement to qualify for their equipment financing.

5. Business Lines of Credit

The biggest advantage to a business line of credit is that you only pay interest on the amount you’ve used at any given time. So, your credit limit may be $30,000, but if you only withdraw $10,000, then you only pay interest on that $10,000 that you’re actually using.

Often described as a hybrid between a credit card and a traditional business loan, a line of credit is a pool of money established by the lender with a maximum credit limit. If you’re looking for a more flexible source of money for your new business, consider a business line of credit. You can draw from the line of credit for nearly any business purpose and in any amount, up to the credit limit.

6. SBA Microloans

Applying for an SBA loan, in general, can take time, and borrowers might find themselves jumping through what feels like unnecessary hoops to stay compliant with the program’s requirements. Originally created to make startup business funding more easily accessible to women, minorities, and veterans, the U.S. Small Business Administration’s SBA microloan program partners with community-based, nonprofit, intermediary lenders to provide small business borrowers with $500 to $50,000.

Carrying interest rates between 8% and 13%, and term lengths not to exceed six years, traditional funding with these desirable rates and terms are rarely, if ever, available to brand-new businesses outside of this SBA-subsidized program.

Remember that funding being like painting a room. The fact is, painting is the last step – after sanding, repairing holes, sanding again, primer, etc. This analogy is applicable to funding for first-time entrepreneurs because you have to do a lot to be ready of prep before you can successfully raise funds.

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Designveloper is the leading software development company in Ho Chi Minh City, Vietnam, founded in early 2013 with a team of professional and enthusiastic Web developers, Mobile developers, UI/UX designers and VOIP experts.

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