When trying to fund your business, there are way more options than you might think! Here are some common (and less-common) ways that small businesses can get funding to get started and to grow.
Traditional Bank Loans:
Term Loans: A super common way to fund your business. A term loan is a fixed lump sum repaid over a set period with interest.
Lines of Credit: This is also great for smaller funding needs. Lines of credit provide the flexibility to borrow up to a predetermined limit, paying interest only on the amount used.
Small Business Administration (SBA) Loans:
SBA 7(a) Loan: This is a very versatile loan program offering funding for various business purposes. It’s done in partnership with banks, but working with the SBA can have benefits for small businesses.
SBA Microloan Program: This provides small loans (up to $50,000) provided through nonprofit organizations.
Alternative Lenders:
Online Lenders: Platforms offering quick access to loans with varying terms and interest rates. Be careful of these though, because they can be merchant cash advances with astronomical APRS and fees.
Peer-to-Peer Lending: Individuals lend money to businesses via online platforms.
Crowdfunding:
Reward Crowdfunding: Get funding from your community through donations - you might provide perks and gifts for certain donation amounts, but you don’t have an obligation to do so.
Investment (Regulation) Crowdfunding: This is what Honeycomb Credit does! Your community has the opportunity to invest in you and you pay them back. This is an excellent way of getting funding to grow your business and increase your customer loyalty and engagement.
Angel Investors and Venture Capitalists:
Angel Investors: You might be able to find someone interested in becoming an owner of your business. Angel investors are individuals investing their own money in exchange for ownership equity.
Venture Capitalists: Investors providing funds in exchange for equity, typically for high-growth businesses. This is a great option for high-potential businesses, such as new inventions and those in the technology industry.
Personal Financing:
Personal Savings: If you’ve got it, you might consider using personal funds to finance the business. Just be careful about this and don’t overextend yourself or overwhelm your family’s financial goals.
Home Equity Loans or Lines of Credit: Using home equity as collateral for a loan. Again - be very careful about this because if you’re not able to repay your loan, you might end up without a home.
Grants and Competitions:
Business Grants: Non-repayable funds provided by governments, organizations, or corporations. Nothing like free money, right?
Business Competitions: Prizes or funding awarded to winners of business pitch competitions. One great small organization that offers small grants is the Awesome Foundation - they offer $1,000 grants to “awesome” projects” in cities around the world. See if there’s a chapter around you!
Honeycomb Credit can fund your next step and let you take control of your business’s future!
Did you know that Honeycomb is helping small business owners take control of their funding model for their business? Check out the stories of these 6 women-owned businesses in Chicago who raised money on Honeycomb to build out brick and mortars, expand their marketing reach, and develop new products to hit the market! Learn more about Honeycomb Credit by filling out the form below:
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