Financing a start up is daunting for many entrepreneurs. While hunting for cash, many find themselves sucked into flashy gimmicks promising “Free Money!” and “Fast Cash Now!” from websites and hiring consultants. Unfortunately, most of these promises are empty, leaving many small business owners searching for cash.
As difficult as it may seem, small business funding is available. For qualifying businesses, there really are opportunities to land free money from state, county and city governments, as well as private foundations and corporations.
Technology startups traditionally have the best chance of getting grant funding, often through the federal government’s Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) programs. These programs are lucrative, awarding more than $2 billion each year, but both require a tight match with exacting requirements.
Finding grant money for non-tech businesses is a little tougher. The first step: Figure out if you qualify for any special small business certifications. Some of these special certifications include women or veteran owned businesses. Federal and state governments sometimes give priority for grants to these types of business owners.
Utilize the internet to connect with your local government. Check their websites to find the economic development agency or equivalent in your area. These agencies often offer government sponsored grants in an effort to attract new businesses. Grants are also offered in order to encourage business owners to make their business economically friendly. Unfortunately, in the current economic state, government funding is difficult to secure. However, patients and perseverance can pay off.
Another way to generate cash flow is to find partners or investors. Finding a few partners and/or investors that share your interests and you get along with can be the key to successful financing. Not only do partners and investors give money, finding a couple of partners or investors can make you money in two other ways. First, they involve themselves in the business and have a vested interest in the business doing well. They may bring other types of experience to the business and this is helpful for getting your start-up going in the best possible direction. The second way partners or investors help make the company money is that many other financing entities (including banks, grants, trade associations, and venture capitalists) feel more comfortable giving money to a business that has partners and investors. Getting involved with trade associations that apply to you, attending conferences that invite people who share your interests or expertise, and subscribing to industry journals are three great ways to finding compatible partners and/or investors.
Thankfully, the economy is improving. Credit is coming back to midsize and larger companies faster than small businesses. That’s because small businesses are riskier. Small businesses should benefit from general economic conditions improving and, as that happens, lenders should feel comfortable taking on more risk and making more small-business loans.
Learn more about financing your small business HERE!