When you’re trying to start a new business, one of the hardest parts of doing so is getting the funding together to support it. After all, where do you start when your own personal bank account and savings run dry? There are plenty of ways to do it! From bank loans to crowdfunding, to credit cards – funding your business doesn’t have to be an arduous process. All it takes is a little research and work to find the option that’s perfect for you and your company.
Below, we’ll dive into some ways you can raise the money you need to successfully run your business.
Bank loan and credit union loan
If you’re looking to get money for your business, getting a loan from a credit union is more likely to get you a competitive rate. Why? Credit unions usually offer loan terms with lower fees and a lower interest rate because they’re more likely to take a personal interest in you, a local customer. Big banks, on the other hand, are usually more stringent and less personal when it comes to handing out loans.
Here’s how to become a member of a credit union so you can be eligible to apply for a business loan from one:
- Find a credit union: Use a credit union search tool and if you can’t find a local one, there are tons of credit unions that accept members from all over the United States.
- Meet membership requirements: In order to join a credit union, you’ll have to first qualify. For example, if you live in New Hampshire you could apply for a Manchester credit union and if you’re from Florida, you could apply for a Jacksonville credit union.
- Open an account: The first step after you’ve been accepted to become a member at a credit union is to open an account and make a small deposit – usually $25. After that first deposit, you’re ready to apply for that loan!
- Here are the steps you’ll need to take to apply for a loan through a credit union:
- Application: Fill out the loan application fully – either virtually or in-person.
- Verify your identity: Make sure to include official information like your social security number.
- Earnings: By verifying your income, the credit union will weigh your debt-to-income ratio to see if you qualify for a loan.
- Credit health: Your record of paying off loans in conjunction with your credit score will show the credit union whether or not you’re likely to repay your loan.
- Other steps: Use a loan calculator app to see what your monthly payments might look like so you can prepare financially!
- Here are the steps you’ll need to take to apply for a loan through a credit union:
Credit card
A credit card shouldn’t be your primary means of funding a new business but in a pinch, it can help pay for at least some of your business expenses. Ideally, you can use an introductory 0% interest rate credit card for your business expenses and pay it off by the time that teaser rate ends and the regular rate kicks in.
Be wary, if you fall behind your payments or only pay the minimum payment, you could be setting yourself up for failure and ding your credit score.
Crowdfunding
Whether you’re trying to get a business app or coffee storefront up and running, crowdfunding is an amazing way to finance your business because it gets people in your community and beyond excited about your company’s services or products. Places like Kickstarter or IndieGoGo are great platforms to attract the attention of potential investors or simply provide a place for market testing before you go mainstream. Campaigns can run for a variable amount of days but usually range from 30-60 days.
Funding your business doesn’t have to be hard
By leveraging one of the options above, you and your business will be on your way to achieving success. Of course, funding your business is likely to involve some amount of investment on the part of yourself whether that means your time or your money or both.
But when you’ve tapped out your personal funds, it’s time to go big or go home. You can get a traditional business loan from a bank or a credit union, put expenses on a credit card, or turn to crowdfunding to get the funding your business needs. Whatever option you choose, make sure that you consult with a financial expert to ensure you’re choosing an option that best fits with you and your company’s financial circumstances.