Starting and growing a small business requires adequate funding to turn your dreams into reality. While the prospect of securing financing may seem daunting, there is a wide range of small business loans and resources available to help you fund your way to success. In this comprehensive guide, we will explore the various options and resources that can provide the financial support you need. From traditional bank loans and government-backed programs to alternative financing options and grants, we’ll shed light on the funding landscape and equip you with the knowledge and tools to navigate the process successfully. We shall also discover the funding opportunities tailored to small businesses, learn how to optimize your chances of securing a loan and access the resources that can propel your business to new heights of success.
Financing your business isn’t as easy as it sounds, as a matter of fact, most startups perish in lack of funding. Acquiring business finance and loans is a science and an art. One of the biggest challenges for up-and-coming entrepreneurs is finding flexible-term business finance.
Most entrepreneurs can kick off businesses with their own money, but sooner or later, they start scrounging for the best online business funding. To grow at a healthy rate, every business requires monetary help. Looking for business finance and loans is a quite common activity for newly formed businesses but the amount you need depends on numerous factors:
- Age of the business
- Position of the business
- How well is a business performing
- Market health and opportunities
- How big of a team a business has
If you’re currently looking for the best crowdfunding resources and websites, then you’ll need to build your approach around the above-mentioned facts. Below is our detailed guide on how to find the best resources for medium to long-term business loans.
Myths Revolving Around Small Business Loans
Most small businesses never get into the search for funds because of the common myths regarding funding. Small businesses need to vary these myths and not let them impact their decisions.
Venture Capital Is a Growing Sector for Business Funding
The truth to this myth is that venture capital financing happens in the rarest of cases. Only a handful of large companies with high-powered management get into venture finance opportunities. Most people use the terms venture capital and outside investors interchangeably. Using your resources looking for a venture capital opportunity is not the best idea.
Bank Loans are the Most Common Method of Business Funding
While this is a common myth, in reality, banks refrain from funding start-ups. Banks don’t invest depositor’s money into new businesses because of the high-risk level. To acquire flexible business finance from banks, businesses need to show a steady revenue stream.
Business Plan is a Staircase to Funding
Business plans do help but they aren’t a sure-fire way to gain business finance and loans.
A strong and well-thought-out business plan may help you turn the tide in your favor but investors need more than just a plan. They need to see the steps you’ve made on your own to follow through on your plan. No smart investor would give you money just for plans. There are some rare cases where investors are ready to invest in a business in the initial stages. Usually, in those cases, they’re investing in the entrepreneur, not the business plan.
Getting Small Business Loans is the Hardest Thing Ever
One common myth revolving around business financing is that it is the hardest thing a small business will have to go through. One of the biggest factors involving small business finance is the preparation you put into it.
Transparent books, having enough liquid-able assets are pointers that work in your favor. Industry experts and professional business investors say that preparing ahead of time is the best strategy a business can follow.
The Larger the Amount, Fewer Chances of Getting a Small Business Loan
A myth that usually stops businesses from demanding the ideal amount is that larger sums lead to lower approval rates. Instead, lending institutions don’t have a problem investing large amounts if the business idea and plan sound profitable. Investors also benefit from investing big amounts in the long run, you shouldn’t be afraid to ask for the amount you actually need.
Interest Rate is the Most Important Factor in Small Business Loans
Unfortunately, businesses that go looking for a first-time investment, don’t really understand what works in their favor. Because of common myths, first-time entrepreneurs fail to look at anything beyond the interest rate on the asked amount. No doubt, interest rates are important, but they aren’t the only things worth looking at.
Apart from the interest rate, there are various factors to keep an eye out for. Businesses should carefully analyze the terms of the loan, how soon they need to repay the money and where they can invest the money.
Small Business Loans – Preparing Your Business for Funding
Getting business finance and loans is already a tough process, and pitching potential investors about getting funding without preparing your business is wasting time and resources. Like all things in business, financing also depends on numerous factors. Factors such as growth rate, resources, business plan, and so on. Here’s how you can prepare your business for the best online business funding.
Small Business Loans – Is Your Business New or an Established Business?
How a business will be funded depends on the specifics of a business. If a business is an ongoing one, they have a higher chance of getting loans from a bank. Similarly, high-tech and high-growth startups usually get funding with relative ease. The same won’t be available to established businesses that show slow growth.
Small Business Loans – Refine Your Business Plan
As we mentioned above, a business plan shouldn’t be your only strategy, but it should be part of your strategy for gathering investors. Your business plan is an essential part of making sure you get the funding you deserve. The business plan should show how much money is needed, how the money will be used, and how you plan to earn the money back.
Investors usually look into a summary of how you plan to use the money and would want to hear your initial pitch. If your pitch impresses the investors, they’ll want to look at the business plan you’ve created.
If you want a bank loan, then you need to have a business plan as some commercial banks require it. Conclusively, having your business plan is just going to help your mission.
Small Business Loans – Improve Credit Score
An investor will only invest money in your business if you don’t know how to handle your finances. As a business, you must understand the importance of dealing with money well. As a startup, you won’t have actual profits and losses to prove how well you handle your finances. That’s why it is vital to have a healthy credit score as it’s an insight into how you handle your finances.
Small Business Loans – Focus on The Financials
Want to get business finance and loans? Find a way to return the money as soon as possible. Investors want to know all about your big idea, they need to see how passionate you are for your business and how fast you plan to pay back the money. Be big on financial details and show potential investors’ numbers. Numbers are more impressive than words.
Best government resources for funding and loans usually prefer businesses having projections for at least 3 years.
Small Business Loans – Understanding Your Options
There is no end to how many financing options you actually have. Bootstrapping, best crowdfunding resources and websites, angel investors, and so on. As a business, it should be your aim to thoroughly research each financing option. This research will help you find the ideal funding option for your business.
Each investor offers their money and expects something in return. The ideal funding option for your business should be dictated by how much you qualify for and what sacrifices you are willing to make for the money.
Business Funding and Financing – Push Your Pitch Towards Perfection
Preparing your business for acquiring business finance and loans has one final step. It doesn’t matter if you’re sitting in front of a room full of venture capitalists or in a room with a single banker, you must have an impressive pitch ready to serve to the investors.
Best Crowdfunding Resources and Websites
For entrepreneurs, the term crowdfunding is not something new. For first-time investors, crowdfunding is raising funds for a new or established project by reaching out to a large group of people online. Crowdfunding is probably the easiest method to raise funds for a project.
Commonly, there are 3 types of crowdfunding:
- Reward Crowdfunding: Businesses raise funds by reaching out to their customers and supporters. For their monetary help, people receive something in return when they pledge a particular amount.
- Debt Crowdfunding: Debt crowdfunding is pretty much like getting a loan. Businesses receive a certain amount they have to pay back in a fixed time. Tons of startups prefer this method over a traditional bank loan.
- Equity Crowdfunding: The name must be enough to clarify what kind of crowdfunding this is. Businesses give up a portion of company ownership to people who invest money in the business.
The best crowdfunding resources and websites can come in handy whenever you are looking to raise money for your business. Almost all the platforms have a processing fee, this fee is deducted from each transaction or from the total earning. However, each website has its own set of rules and regulations. Here is our pick of the best crowdfunding resources and websites.
Kickstarter is without a doubt the industry leader when we talk about the best crowdfunding resources and websites. Launched in 2009, the company is very well known for helping entrepreneurs and tech startups to raise money. Most businesses love to use the Kickstarter campaign for business finance and loans because of its reputation.
Since its launch, Kickstarter has helped raise over $5.6 billion for more than 197,000 projects.
IndieGoGo users often create fundraising campaigns for tech innovations, creative projects, and community programs. The platform is pretty much similar to Kickstarter except for the all-or-nothing fundraising model.
Businesses can choose between fixed and flexible funding models, fixed is used when businesses absolutely need a certain amount, on the other hand, flexible is used to get any amount regardless of the end goal.
Patreon is one of the best crowdfunding resources and websites among digital creators. It is mostly used by YouTubers, Podcasters, and bloggers to raise funds. As opposed to you collecting one-time donations, you can set up a subscription model where patrons can contribute a specific amount regularly.
Patreon has a 2.9% fee and 30 cents from every single user pledge. Patreon has an attractive user base of 2 million active patrons and over 200,000 creators.
Best Resources for Medium to Long-Term Business Loans
Each business has a different requirement for funds. Some businesses choose to go with long-term business loans instead of one-off payments from crowdfunding sources. Long-term business loans are repaid over 1 year or longer. Some businesses choose long-term business loans only because of their low-interest rates and manageable payments spread over a longer period.
To get long-term business loans, you need to have strong qualifications. Businesses that are fit for these loans can leverage the best resources for medium to long-term business loans. Below we have mentioned our pick for best resources for medium to long-term business loans:
- Funding Circle
Not all businesses are qualified for a bank loan and that’s why they search for alternative lenders. If your business isn’t qualified for a loan, the next best way to get funding is Funding Circle. With Funding Circle, businesses can expect to get funding in a way that’s most similar to a bank. Here’s what to expect:
- Loan amounts of up to $25,000 – $500,000
- Term: 6 months to 5 years
- Interest rates are between 4.99 – 22.99%
- The origination fee is between 3.49% – 6.99%
- Monthly repayments
The Funding Circle is one of the best resources for medium to long-term business loans.
BlueVine came into existence in 2013, and it has delivered more than $9 billion to more than 200,000 customers. They offer online vendor and bill payments programs and business checking accounts. Here’s what to expect from BlueVine:
- Loan types: invoice factoring, lines of credit, and term loans
- Minimum FICO credit score: 530
- Maximum loan amount: $5 million
- Better Business Bureau Rating: A+
Another one of the best resources for medium to long-term business loans is Biz2Credit. Biz2Credit was founded with an aim to connect borrowers to lenders. Using Biz2Credit, businesses can acquire funding easily.
- Loan types: lines of credit, merchant cash advances
- Minimum FICO Credit Score: undisclosed
- Maximum Loan Amount: $5 million
- Better Business Bureau Rating: A+
Business Funding and Financing – Best Government Resources
When you know where to look for funding, you can acquire the ideal funding for your business. The best government resources for funding and loans are the perfect source of funding for your business. The Covid-19 pandemic has been a hard time for small businesses and the government has been trying to help to keep businesses afloat. Here’s a list of the best government resources for funding and loans.
- Federal Stimulus Aid
Businesses of various sizes have been impacted by the Covid-19 pandemic. USA President Joe Biden recently claimed that the coronavirus stimulus bill is aimed to help businesses. $1.9 trillion is invested to help businesses stay afloat in these trying times.
- Government Grants
You can search for a grant for your business from the federal government at grants.gov. This government site has the most comprehensive database of funds that the government is willing to give away to businesses. Thousands of grants are available to apply for, with opportunities for companies from all industries. This is definitely one of the best government resources for funding and loans.
- General Small Business Grant
You can get business finance and loans from various non-profit and corporate entities offering funds for small businesses. Some of the most common programs open to application for small businesses in any industry are:
- The Barstool Fund
- GoFundMe Small Business Relief Fund
- KKR Small Business Builders
- Nav Small Business Grant
- New York State Covid-19 Pandemic Small Business Recovery Grant Program
- Walmart Local Community Grants
- Industry-Specific Small Business Grants
Some small business grant programs are limited to specific entrepreneur demographics or business profiles. They also have an application process that is super easy to navigate. This is one of the best government resources for funding and loans. Here are some common examples of industry-specific business grants:
- Amber Grant Foundation
- National Association for the Self-Employed Growth Grants
- BIPOC Small Business Grant by Annuity Payment Freedom
- Black Founder Startup Grant
- The Halstead Grant
- 1FundWomen Entrepreneur of the Year 2021
- Power Forward Small Business Grant
- StartOut Scholarship Program
Business Funding and Financing – Best Resources in India
If you’re a business owner in India, then this is the right time to pour all your resources and find success. Funding is an extremely significant aspect to fulfil your vision of a business. However, it is not easy to find funding, you need to find the best business funding resources available in India. Here are a few successful business funding resources available in India:
- Angel Investing
Angel investors are the influencers who are constantly in search of a business investment opportunity. Before going to an angel investor, you need to make sure that you have a strong business plan. These investors usually have their own investing group full of people who wish to invest in up-and-coming businesses.
- Equipment and Invoice Loans
If you have a startup in the manufacturing industry in India, then these types of loans are the best business funding resources available in India. The loan funding for these types of businesses can reach up to 25 Crore INR, and some banks also offer up to 100 Crore. These types of loans have a longer repayment term and a steeper interest rate.
As we mentioned above, crowdfunding is one of the best ways to get a loan for any kind of business. If you’re unable to get any other kind of business finance and loans for your startup, then crowdfunding is an excellent choice.
- Multiplier Grant Scheme (MGS)
MGS is definitely one of the best business funding resources available in India for industries like IT, analytics, business software, IoT, AI, and technological hardware. The grant is aimed at helping the growth of innovative products and technologies for the Indian industry. The grant offers up to 2 Crore for a 2-year duration.
Best Business Funding and Financing Resources Available in the UK
Regardless of the industry, location, and scale of the business, getting desired funding is something every entrepreneur aims for. It can be easy to get business finance and loans in the UK if you know where to look for them. Grants, private investors, crowdfunding, and other sources can be focused on to get funding for your business. Here is our pick of the best business funding resource available in UK:
- Prince’s Trust Grants
The Prince’s Trust Grants has been helping new and established businesses with funds since its inception in 1976. To be eligible for funding, the applicants must be 18-30 years old. The funding amounts offered vary between £1,500 to £3,000.
- Apprenticeship Grant
Apprenticeship grants offer funding for offering work and training to young people through the apprenticeship program. The amount you can get from the funding depends on your business area, and the criteria met. Another reason why this is one of the best sources is because they have a scheme that offers £1,000 payment incentives.
- Innovate UK Funding Opportunities
Innovate UK has a wide range of funding options for businesses looking for funds. Some common funding options are:
- SBRI Competition
- Commercializing Quantum Technologies
- ISCF TFI
- Eureka Eurostars 2
- Knowledge Transfer Partnerships
- African Agriculture Knowledge Transfer Partnerships
Innovate UK funding is one of the best business funding resources available in the UK.
Small Business Grants and Financing – USA
Federal and state agencies and private companies offer numerous funding options for brand new and ongoing business operations. Here’s a list of the best business funding resources available in USA:
- Coronavirus Small Business Grants
During the Covid-19 pandemic, the U.S small business administration introduced the coronavirus small-business grants. Here are some common grants that can support your business’s needs:
- Shuttered Venue Operators Grant
- Targeted Economic Injury Disaster Loan Advance
- Restaurant Revitalization Fund
- Small Business Grants – Small Business Lending Fund
The Small Business Lending Fund (SBLF) is aimed to provide funds to qualified community banks and community development loan funds to encourage small business lending. SBLF can encourage small businesses to grow their businesses operations.
- Small Business Grants – GrantWatch
GrantWatch is one of the best business funding resources available in the USA. Using this website, businesses can keep tabs on funding via federal, state, local, foundation, and corporation grants in the U.S & Canada. Before you see if you’re eligible for the grant, you’ll have to become a member of the website by paying a certain amount.
Best Business Small Business Loans and Grants – Canada
Just like any other business in any location, acquiring funding is hard. Here are the best business funding resources available in Canada:
- CanExport Program
The CanExport Program offers to fund export marketing and international expansion activities. This program helps exporters improve sales and brand exposure in international markets.
- Amount: Up to 75% of project costs to a maximum of $75,000 in non-repayable grant funding.
- Eligibility: The program is available for profit incorporated federally or a business classified as LLP.
- Canada Job Grant (CJG)
If you want to reduce the cost of third-party skill training to new and old employees, then the Canada Job Grant is the best funding option out there for you. Here’s what to expect from Canada Job Grant:
- Amount: Non-repayable grant contributions of 50-100% of training costs
- Eligibility: All Canadian SMEs with $2M liability insurance.
- Bank Loans
Bank Loans are one of the best business funding resources available in Canada. Multiple banks offer various advantages, whether it’s customized repayment or personalization. Build up a strong business plan, keep your books clean, and show enough profits to be eligible for a bank loan.