Where to find capital and loans for your small business [Checklist]
Finding financing for a small business can be overwhelming. We’ve scoured the internet for resources to help get you organized in preparation for approaching grant-lending institutions, banks, the SBA, even friends and family who may want to lend money for that much-needed renovation or to get your startup off the ground.
Shark Tank has given many entrepreneurs the idea that venture capital is magically available if you have the right idea (and can cry on command). The truth is that venture capital isn’t a good idea for most small businesses, says Jeremy Halpern, partner at Nutter. More people need to hear that and consider other options.
Types of financing available
There are generally five different ways that small business owners can raise capital or secure financing:
- Loans (personal loans from friends and family, and bank loans)
- Grants (government and private institution)
- Debt financing (mostly for working capital or large expenses)
- Equity financing (selling company shares)
- Crowdfunding (Kickstarter, GoFundMe, Mainvest)
Resources for finding small business funding
Adopting a solid business strategy is key. Business plans, for instance, are key to securing financing. Lenders want to see that you know who you are and where you plan to go so they can justify lending you money or investing in you as an entrepreneur. You’ll need to be able to say how much money you need and how you will use the money, as well as provide detailed financial information.
Check out these resources to understand and access financing for your small business:
- Finance options from the U.S. government for your small business (usa.gov)
- SBA loans (note that SBA loans may require proof that you’ve been turned down for more traditional funding from conventional banks and sources)
- The Math and Terms of Angel/Venture Finance: How it Actually Works
- How to build your small business crowdfunding campaign
- Funding options for minority small business owners
- The Capital Network, a nonprofit helping female and early-stage founders
- Female Founders Fund, a VC fund for women small business owners
Checklist for your Financing Plan of Action
You’ll need to first be sure to have the following completed and/or on-hand before approaching lenders or possible investors.
When selecting a lender, think about what matters most to you based on your current and future needs:
You should also create a spreadsheet of your business debt. Include any loans, lines of credit, mortgages, or leases that you already pay. Be sure to note the following: