What Type of Funding is Right for My Startup or Growing Business?
Included with our Business Plan Development service is Funding Search Assistance. This is unique in the industry as very few firms offer a full solution to funding.
Once your business plan is complete and approved by you, we can begin to seek out investors through our network that are interested in projects like yours. Helping you get funded is our top goal with every project. Having the right relationships are a major part of successful fundraising. While funding can’t be guaranteed, this free service will provide opportunities other companies don’t offer
Bank/U.S. Small Business Administration (SBA) Loan
A bank loan can involve a business loan through a bank, as well as real estate loans/mortgages (using your home equity as collateral), lines of credit, and SBA loans. SBA loans, much like FHA loans for home purchases, are made through a bank or lending institution, and the SBA guarantees a portion of loan payment back to the lending institution. Depending on the bank, lending decisions are made in-house at the local branch or on the national level. A business plan is always necessary for this funding choice.
Equity Method – Angel Investors or Venture Capital
Investors generally want equity in your business – basically a percentage of ownership in your business. This is accomplished by issuing stock or “membership units” for a Limited Liability Company or LLC. Stock and membership units are essentially identical, just different terms for different organizations. This method is generally preferred if an entrepreneur plans to exit the business in 5-8 years. Business plans and pitch decks are usually required.
Royalty Method – Angel Investors or Venture Capital
This method provides investors with royalties on your business’s returns instead of a piece of ownership in your company. Royalties can include providing the private equity investor a percentage of sales or net income. When utilizing royalties on net income, investors and owners strive toward the common goal of increasing overall profits. Business plans and pitch decks are usually required.
Other Loan Programs
These programs are generally offered by smaller lending companies that are willing to take more risk. These other loans are generally online and will require a full business plan to qualify.
Keys to Getting Startup Funding or Expansion Capital
COMBINE FUNDING METHODS
Many entrepreneurs will combine several funding methods, such as acquiring an investor to get cash on hand as a stop-gap while getting approved for a bank loan.
BRING MONEY TO THE TABLE
The more money you already have to contribute, the more likely you are to get funding.
HIGH QUALITY PLAN AND DECK
This is obvious, but you only get one shot. Don’t blow it with low-quality work. You’re there to impress investors and stand out from the crowd – and there is a large crowd.
AN IDEA THAT SOLVES A PROBLEM
The best businesses solve a societal problem.
HAVE THE RIGHT TEAM
Investors want to know that you have the right team in place to run your business, both in management and professional services.
KNOW WHO TO APPROACH
Individual banks and investors have specific types of businesses on which they like to focus. They are comfortable within certain industries or areas of expertise. Knowing the appropriate investor to approach is half the battle.