Did you create a revolutionary idea? Did your revolutionary idea never get to be a business?
We are here to show you the steps you take from revolutionary idea to making the business of your dreams a reality.
This article helps explain where you start, some of the choices you need to make, and provides many sources to secure business funding.
There are several options for obtaining business funding for small or start-up businesses. But some small business funding options target particular products, services or benefits.
Our resource center walks you through some of the steps which need detailed preparation.
To help you walk the steps successfully, we are providing you with information on small business funding sources.
Small Business Funding Options
We are listing several general business funding categories. These general business funding categories are generic.
We will explain or give examples of each business fundings source listed. They include, but are not limited to;
- RFP’s/Grants – The federal, state, and local government offers ‘Request for Proposals (RFP’s) and grants. They offer these RFP’s and grants for small and start-up businesses.
- SBA Loans and Grants – The Small Business Administration offers small seed grants and business loans. They offer these small seed grants and business loans to small and start-up businesses.
- Crowdfunding – A new way to raise capital is to list your good business ideas on one of the crowdfunding platforms. People who read about your business idea and wish to take part send money for some type of benefit.
- Invoice Funding – If you have a business which is open, doing business, and invoicing you can apply for an invoice funding loan.
- Term Loans – Term loans are good for an established business. If the business owner has good credit, most banks will give a term loan to help finance business growth.
- Bank Line of Credit – Business lines of credit is good for established businesses. It is a given amount of revolving credit given by the bank to the business to help finance business growth.
- Credit Cards – Start-up businesses and established businesses can rely on credit card financing for business growth needs.
Using RFP’s and Grants to Get Funds for Your Business
Many businesses overlook or ignore the business funding they can receive from federal, state, and local agencies. The federal, state and local agencies issue Request for a Proposal (RFP) for a contract need. Some federal, state and local agencies also issue grants.
Anyone reading through an RFP can find it intimidating. Even the most financially able small business owner may get confused. But pursuing an RFP is always worth the effort.
By applying for and receiving RFP money, you have secured small business funding you do not have to pay back.
In exchange for the RFP funding, you perform the tasks the RFP lists and report your results back to the funding agency.
Please see the below list for a few examples of;
- Workforce Innovation and Opportunity Act (WIOA)Provides federal job training funds of $185,000+ per business. This funding is for any business who provide youth and adult programs which encourage basic work readiness.The business can also provide financial literacy programs.
- Department of Veteran Affairs – Leadership & DevelopmentBusinesses provide labor, materials, and equipment from a fund of $1.76 billion. This money goes to selected RFP vendors who perform Leadership and Personal Development Courses in VA centers throughout the U.S.
- National Recreational Boating Safety Program$5,000,000 RFP funding given to approximately 40 small businesses annually.National Recreational Boating Safety Program targets the reduction of fatalities to specified levels for each upcoming year. Any small business initiative that can help to reduce recreational boating deaths, injuries or property damage is welcomed.
Small Business Funding (SBA) – Loans and Grants
Small Business Funding (SBA) loans and grants have specific needs they want to be met for any business funding awarded. The most common type of funding the Small Business Administration gives is within their STTR and SBIR funding division.
We have listed information which relates to each fund. If you have a new and innovative way to do business in any field, this grant funding source is something you need to know.
Budgets exceed $1 billion with a reserve of 0.45% of the extramural research budget for STTR awards to small businesses.
Provides funding for private businesses to formally collaborate with the STTR on their basic science research. This allows the business to mainstream their product or service commercially.
Small business funding which ranges up to $50 million for an innovative idea, technology or process which benefits the public.
Crowdfunding Or the Give Me Money Platform
Crowdfunding is a new small business funding vehicle. It has been around for several years but is starting to really grow and develop funding options for businesses.
There are several crowdfunding platforms you can use to market your revolutionary business idea.
The crowdfunding platform doesn’t care if you are a start-up business or an established business seeking to grow and develop.
The crowdfunding process uses social media to raise awareness of your business product, service or need.
Today’s crowdfunding platforms are expanding and multiplying monthly. It is very important you check out your preferred crowdfunding platform’s past history and reputation.
Also research your preferred crowdfunding platform’s fees, support, and features. This needs to occur before making your final selection.
There are many crowdfunding platforms out there. It should be easy to get the best match for your business needs if you are smart in your research.
Getting business funding from invoice funding only works if you are a business with unpaid customer invoices.
Some businesses who are feeling a financial pinch will pre-sell their unpaid invoices to another company for an agreed upon lump sum.
The truth is by using invoice funding you are using a convenient and easy to receive a loan.
But your business account receivables are worth far more than the percentage of each invoice you receive.
What’s more, there are fees for using an invoice funding lender and the fees go up over time.
Invoice funding can also be a customer service issue. This happens when your customers are contacted by the third party for their respective balance due.
It can cause customer service issues between you and the people you depend on to keep you in business.
It is better not to use this type of small business funding unless you are certain it is in you and your businesses best interest.
Many new small business owners feel they need a term loan to grow or develop their new business idea.
According to the U.S. Small Business Administration, small business term loans totaled over $600 billion in 2015.
Term loans are one possible way to get funds for your revolutionary good business idea. But term loans need evaluation and be weighed carefully before proceeding.
There is no universal term loan which fits everyone. Each one is structured based on your credit history, business needs, and asset/debt ratio.
Sometimes the terms are good. Sometimes it will take you far longer using far more money than you expected to pay off the term loan.
Documents You Will Need to Get the Term Loan
As a small business owner, once you decide you wish to get funding for your business through a loan there will be documents you need to pull together before you apply.
Term loans require a lot of preparation before you walk into a lender to request a one or any other kind of loan. This list of documents includes, but is not limited to;
- Resumes: The lender may need your resume as well as any of your partners.
- Business plan: Don’t take one step into a lender’s office without a business plan. Your business plan should include projected financial statements, a cash flow sheet, P&L statement, balance report, a projected 5-year plan, and current cash flow.
- Loan application history: If you previously had a loan before and did you pay it off?
- Bank statements: At least one year of your personal and professional bank statements.
- Loan Need – what are you going to use the loan for and your projected success.
- Debts: The bank or lender will want to know what your current debts are and if you have any outstanding loans.
- Income tax returns: You will need your past three years of personal and business tax returns.
- Collateral: This is optional to the bank or financial lender.
- Legal documents: Each lender or bank is different but some require copies of your business lease, your corporate formation registration, etc.
Bank Line of Credit
A bank line of credit is like a revolving door credit card. A bank line of credit is all about the flexibility of receiving the business funds you need.
An overlooked benefit of the bank line of credit is you only pay interest when you borrow on the line of credit.
Once you pay the credit amount back, the same amount is available to you right away.
In fact, as long as you pay attention and meet the lender’s line of credit terms the lender will give you more credit. This credit use is for any future small business funding need.
Also, bank lines of credit can be either secured or unsecured lines of credit. Secured lines of credit usually come in around 85% of the appraised value for whatever you select to secure your line of credit.
The appraised value of your secured asset can be a home, real estate, savings account, etc.
Unsecured lines of credit do not need any secured asset to get but most come with fees.
Business credit cards present a very reasonable way to find business funding to launch your revolutionary business.
But before you start applying for new credit cards to use in your business, you need to structure a repayment plan. The repayment plan will schedule and plan when you pay off the credit card in a timely manner.
Some mistakes some small businesses make, is they take out more and more credit cards to pay off the credit card they maxed out.
Once the small business accrues many unpaid credit card balances, they are looking at a mountain of owed dollars they cannot pay back.
If you add the fees and interest to the credit card debt, it can add up to be a large amount of money. It is a hole of credit card debt not easily paid off.
On the other hand, there are credit cards on the market with 0% annual percentage rates on purchases and balance transfers for your first 12 months.
This is a very smart small business funding strategy which allows you to finance your business without paying a dollar in fees or interest. If you pay your balance off in the first 12 months.
Family, Friends, and Associates
You always have the option of approaching your family, friends or associates for your new business idea funding need.
To ask family, friends, and associates for business funding needs careful consideration.
If things do not go as you expect in your small business, the extended money your family, friend or associate gave you can cause anxiety and stress.
When a business fails and you cannot give back the money you borrowed from a family member things can get difficult.
When that happens, there have been cases where family members quit speaking to each other.
When that happens there have been marriages which break up.
When that happens there has been friends or and associates who blackball you to others.
There is no easy answer we can provide as to whether you need to approach someone who has the money you need. We can only say proceed with caution.
Business Funds Are Needed Now
If you need business funds now for your revolutionary business idea, then today is the day you need to begin.
Every day you wait to take a step towards the future you are planning is a day lost you can never get back.
We are providing you with the tools you need to succeed in getting your business funding. But you are the one who needs to use the tools to make it happen.
Don’t wait another day. We want to hear your comments and questions so we can help you take your first step to business success.