Finding the cash to finance your existing company or a new company can be an exciting experience. A superior business plan can assist you in determining the amount of money you require to get started. Honestly, nearly all new businesses are beginning with the proprietor’s own credit cards, cash, friends and family, etc. without any kind of plan at all.

If you have aspirations and dreams of owning your own business, then you believe that you must by no means, ever give up. All right, it may take some time to transform your dream into a gainful business venture, but with faith, determination and a little imagination, you can set up your dream business successfully.

One way to a thriving business is your capability to increase the money and get suitable financing for your new business. Increasing the capital is the most fundamental of all business activities. Bear in mind, it takes money to create more money. A bounty of other business holders has done it as well and now you can follow in these footsteps.

There are lots of profitable ways to get money for business ventures or Raising finance. These ways will assist you in raising the initial start-up despite the type of business you are scheduled to develop.

• How do You Finance Ventures?
• How do I Get Free Money to Start a Business?
• What Are The Possible Sources of Financing For Your Business Venture?
• How Can I Get Money For my Business?
• How to Get Funding For a Business Idea
• How to Get Funding For a Business Idea in South Africa
• Free Government Money to Start Business
• How to Raise Money For a Business Without a Loan
• Business Funding For Startups
• Free Money to Start a Small Business
• Crowdfunding For Startups
• Who Qualifies For SBA Grant?
• Can I Get a Government Grant to Start a Business?

How do You Finance Ventures?

Apply For A Credit Card With Low Interest Rate And A Respectable Limit: This is not most favorable, but it is one technique of filling your hands with cash. The main disadvantage is the rate of interest that is charged for every purchase. So, be very careful while you go this way and ensure that you pay the credit card off as quickly as your business starts turning revenue.

Apply For A Business Advance: This is somewhat difficult to get because nearly all banks still do not offer loans for online ventures without establishing your credibility. However, it is worth an attempt. When you apply for a business credit, ensure that you take along a well printed business plan and boast a solid idea of the amount of money you require and what it will be utilized for.

Read Also: Business Plan Template

Family Loans: This is one more type of credit that you most likely not desire to take, but if the amount is sufficiently small, you can perhaps pay it off rapidly and stay away from any family stress. If it is a bigger amount, stay up to date on your payments and consider it just similar to you would do for other credits and do not fail to pay.

Open A Revolving Line Of Credit: By opening a revolving line of credit, you pay your invoices with the credit and afterward pay your line of credit when you are rewarded for your merchandise or service. This is obtainable with nearly all banks, but you need to submit either an influential business plan or a credit history that is good.

Selling Items You Have Previously Owned To Make Cash Reserves: We all have stuff lying around that we do not use. That is why we include yard sales. By making use of this “stock” you can create some cash and invest it in your business.

Purchase Items On Discount Sale And Then Sell Them For A Profit: If you love discount shopping and have a knack for discovering great sales, you can hit upon sale items and after that sell them for retail price online.

Sell The Products Of Other People For A Commission: This is a small business that requires no investment. By selling the products of other people for commission there is a chance of getting more familiar with more people besides getting you money. This acquaintance would help you to develop your business to a great extent.

Take On A Silent Partner: This is one kind of availing a loan, but friends and family may be more eager to help you out if they are paid with an interest in the business. Furthermore, your close friends or members of your family have confidence in you and would like to see you succeed.

Having a loan from a friend or family member is usually the most readily accessible source, particularly when the capital necessity is lesser. Family members and friends require fewer guarantees and are more open to your thoughts than professional sponsors.

They are as well more patient if your company takes longer than anticipated to get off the ground. Offer to pay them back through the profit sharing. However, bear in mind that you cannot just boot them out when the investment sum is paid back.

Take On An Additional Job: Assuming an additional job would permit you to finance your business venture by making cash from another arrangement pending when your business is capable to fund itself or employ the additionally generated cash to make a reserve.

Forfeit Unused Items: Though it is not recommendable, it is a method to make cash. If you do a provisional pawn on a costly item, you will have a time period of 30 days to pay back to the pawn shop and get back your products. In the intervening time, you can make use of the funds to offer your business a jumpstart.

Take On A Provisional Part-Time Occupation: You can go for a work at a retail store or a supermarket. It is short-period and comparatively simple work, and for the reason that you do not require lots of training, there will not be hard feelings when you depart.

Have A Loan From Your Superannuation Savings: You may desire to consider redeeming a stock or bond, or having a loan from your retirement savings. This money can be repaid at anytime with interest if you desire as soon as your business is awake and run in succession.

Sell eBooks Online: To sell books online you do not need any investment except your research and time. However, if you have a project, cooking hints, gift, etc., that you are versed in, establish your business by either selling or writing eBooks online.

You can as well buy previously written eBooks and can put them for sale. If at all possible, put them up for sale on eBay with the intention of taking in a higher ticket cost for each eBook.

Set Foot In A “One-Time” Project To Earn Money: Request a buddy to spot the start-up money for one time of selling. That means, they are not an associate, but you get the money to start your business.

Make Use of A Tax Repayment As Investment Assets: Nearly all people use their income tax checks on statements or stuff they would like to buy. Make use of your money as set up cash.

Business Funding Services
To get money for business ventures, industrialists have made use of lots of methods to set up capital and bootstrapping is one among the ways to get money for business ventures. Bootstrapping is the other name of business funding.

The bootstrapping is to promote and expand by use of individual initiative of a person and work without dependence on external assistance. The majority of small businesses are initiated with nothing more than the personal money such as home equity loan, credit cards, etc., of the business owner, his or her debt and work.

Bank Loans or Small Business Administration (SBA) 
Availing Bank Loans or SBA loan is one of the ways to get money for business ventures. Bank Loans or Small Business Administration is the ideal way of starting up lots of small businesses.

The main benefit in availing SBA loans is that the SBA will take up some of the risk in support of the small business. In fact, the SBA loans are taken from a private bank in which the SBA stands as the “guarantor” of the loan.

Small Business Administration loans
There are two fundamental categories of SBA loans that include:
· The Basic 7(a) Loan Program: The main benefit in availing the loan under the basic 7(a) loan program is that you can get a maximum loan of 2 million dollars to start a small business. This is the most used form of loan that SBA proposes.
· The Micro loan Program: The Micro loan Program is a special loan program for starting small businesses in which you will get a maximum loan amount of 35,000 dollars.

Bank loans
Availing a loan from your bank is quite simple. You can easily approach your local bank and inquire about the necessities for availing a small business loan. The loan course may be quite easy or very complex depending to the bank.

Try Venture Capital
Venture capitalists are expert investors who may be responsible for a large pool of capital collected from a variety of resources. These companies invest in novel, even high-risk or tentative businesses without an established track record, with the prospective for speedy growth and high profits in a short time period.

They generally desire equity or partial possession of a business in exchange for considerable returns, normally more than 40 %, while they exit usually in three to seven years.
Several business ideas are so excellent and have so much prospective that getting venture capital may be the technique to go.

In this technique, the industrialist puts forward his business plan to a venture capital company. These companies are typically interested in prospective projects that need more than $500,000 owing to the high cost of evaluation, investigation and administration. If a venture capital company receives 1,000 business applications a year, it will normally examine less than 10 % and may in fact invest in only 3 % or 4 %.

The company will evaluate the business plan and, if fascinated, offer to supply startup money, normally, more than 100,000 dollars in replace for an equity share in the company. Though this can be a lengthy and tricky process, the rewards can be through the ceiling.

Personal Savings
The primary place to search for financing your business is truly at home and assets and personal savings are the simplest source of capital. If you have saved the money, you make use of it instead of having a loan or rounding up sponsors. Otherwise, you can take a list of items you do not require and have a garage sale.

Nearly all people are pleasantly astonished how much money they can increase in a single weekend. You can as well make use of your real estate and life insurance policies to get the required capital. Those who possess homes oftentimes protected equity loans and can make use of the income to start a business.

Try Angel Investors
Angel Investors are interested in making addition on their capital than they can make through conventional markets like publicly traded stocks or mutual funds. They are your attorney, accountant, physicians or other individuals who look for new businesses to spend in return for equity rights.

Typically providing extra capital in the array of $25,000 to $500,000, anticipate angel investors to demand towering returns for their investments. When comparing venture capitalists, angel investors are less severe and can as well be predictable to offer professional guidance and counseling for the start-up.

While you elucidate your plan to them, and ask for their counsel, casually request them if they would mind allowing you know of, or guide your way any prospective sponsor they may happen to meet.

Offer him a copy of your booklet and request him if he would inspect it and offer any proposal for actualizing it, and certainly, let you know of any possible sponsors. In any case, it is a good idea at all times to make them know you are eager to pay a “finder‘s charge” if you can be directed to the correct investor.

Professional group such as dentists or doctors are known to boast a propensity to join work-related investment groups. When you meet them next time, you talk with your dentist or doctor, offer him a brochure and elucidate your plan. He may desire to invest on his own or maybe arrange an appointment for you to speak with the administrator of his investment group.

How do I Get Free Money to Start a Business?

The grant-hunting process is a daunting one, especially for new entrepreneurs. Hundreds of opportunities for free money are out there in the business sphere, each with its own set of rules and requirements. Fortunately, organizations exist to help you navigate the world of grants and find opportunities that fit your startup best.

If you’re ready to filter through free money resources, start here:

The Grants.gov Database

It’s a bit of a beast, but it’s a helpful beast. Grants.gov offers a comprehensive database of government agency-administered business grants, and you can use the database to narrow down the grant options to those that suit your business.

To find grants relevant to your startup, click “Search Grants” and enter a keyword that is associated with your type of business. Each relevant search result will have an opportunity number that is clickable, so you can learn more about how to apply for the grant.

SBIR and STTR Programs

You can also find opportunities in the Small Business Innovation Research and Small Business Technology Transfer programs, which focus on research and development for technology innovation. Simply click “Open” under the Solicitations tab to see all current opportunities.

Use these programs to connect your small business with federal grants and contracts from a dozen government agencies.

U.S. Small Business Administration

The Small Business Administration operates small business development centers in each state to provide assistance to entrepreneurs who aspire to get their businesses off the ground or to grow existing businesses.

Universities and state economic development agencies head these development centers and offer business owners plan development, manufacturing assistance, financial packaging, lending assistance, exporting and importing support, disaster recovery assistance, procurement and contracting aid, market research, 8(a) program support and research guidance.

Your local center can connect you with relevant grant opportunities, so find your regional business development center and get in touch.

Investigate Corporate Grants

In addition to sifting through countless small-scale grant opportunities, you might opt for a large corporate grant. These grants receive thousands of applicants, so they’re competitive, but they also shell out hefty rewards:

• FedEx Small Business Grant Contest: Applicants create videos that share their stories of entrepreneurship to compete for up to $25,000 in grants and $7,500 in FedEx office supplies. FedEx holds the contest annually.
• National Association for the Self-Employed: These growth grants are catered to microbusiness owners who are members of the association. These grants are administered monthly for up to $4,000 each.
• Visa Everywhere Initiative: Startups are tasked with solving three business programs. Winners are eligible to receive up to $50,000. Since the Visa Everywhere Initiative began back in 2015, 70 winners have been chosen.

Check for State Grants

Another excellent place to search for grants is within your own state. Washington DC’s Department of Small and Local Business has a Northeasterly, Deanwood Cultural Arts Activation Grant for up to $60,000 to utilize indoor or outdoor commercial spaces in the Deanwood neighborhood, while the Arizona Commerce Authority offers the AZ Step Program for small businesses that are interested in entering export markets for the first time.

Kansas has a Job Creation Program Fund for companies that want to get started in the state and Maryland encourages quality care and education within child care centers with its Child Care Quality Incentive Grant Program.

What Are The Possible Sources of Financing For Your Business Venture?

Not only will diversifying your sources of financing allow your start-up to better weather potential downturns, but it will also improve your chances of getting the appropriate financing to meet your specific needs.

Keep in mind that bankers don’t see themselves as your sole source of funds. And showing that you’ve sought or used various financing alternatives demonstrates to lenders that you’re a proactive entrepreneur.

Whether you opt for a bank loan, an angel investor, a government grant or a business incubator, each of these sources of financing has specific advantages and disadvantages as well as criteria they will use to evaluate your business.

Here’s an overview of seven typical sources of financing for start-ups:

1. Personal investment

When starting a business, your first investor should be yourself—either with your own cash or with collateral on your assets. This proves to investors and bankers that you have a long-term commitment to your project and that you are ready to take risks.

2. Love money

This is money loaned by a spouse, parents, family or friends. Investors and bankers considers this as “patient capital”, which is money that will be repaid later as your business profits increase.

When borrowing love money, you should be aware that:

• Family and friends rarely have much capital
• They may want to have equity in your business
• A business relationship with family or friends should never be taken lightly

3. Venture capital

The first thing to keep in mind is that venture capital is not necessarily for all entrepreneurs. Right from the start, you should be aware that venture capitalists are looking for technology-driven businesses and companies with high-growth potential in sectors such as information technology, communications and biotechnology.

Venture capitalists take an equity position in the company to help it carry out a promising but higher risk project. This involves giving up some ownership or equity in your business to an external party.

Venture capitalists also expect a healthy return on their investment, often generated when the business starts selling shares to the public. Be sure to look for investors who bring relevant experience and knowledge to your business.

BDC has a venture capital team that supports leading-edge companies strategically positioned in a promising market. Like most other venture capital companies, it gets involved in start-ups with high-growth potential, preferring to focus on major interventions when a company needs a large amount of financing to get established in its market.

4. Angels

Angels are generally wealthy individuals or retired company executives who invest directly in small firms owned by others. They are often leaders in their own field who not only contribute their experience and network of contacts but also their technical and/or management knowledge.

Angels tend to finance the early stages of the business with investments in the order of $25,000 to $100,000. Institutional venture capitalists prefer larger investments, in the order of $1,000,000.

In exchange for risking their money, they reserve the right to supervise the company’s management practices. In concrete terms, this often involves a seat on the board of directors and an assurance of transparency.

Angels tend to keep a low profile. To meet them, you have to contact specialized associations or search websites on angels. The National Angel Capital Organization (NACO) is an umbrella organization that helps build capacity for Canadian angel investors. You can check out their member’s directory for ideas about who to contact in your region.

5. Business incubators

Business incubators (or “accelerators”) generally focus on the high-tech sector by providing support for new businesses in various stages of development. However, there are also local economic development incubators, which are focused on areas such as job creation, revitalization and hosting and sharing services.

Commonly, incubators will invite future businesses and other fledgling companies to share their premises, as well as their administrative, logistical and technical resources. For example, an incubator might share the use of its laboratories so that a new business can develop and test its products more cheaply before beginning production.

Generally, the incubation phase can last up to two years. Once the product is ready, the business usually leaves the incubator’s premises to enter its industrial production phase and is on its own.

Businesses that receive this kind of support often operate within state-of-the-art sectors such as biotechnology, information technology, multimedia, or industrial technology.

MaRS – an innovation hub in Toronto – has a selective list of business incubators in Canada, plus links to other resources on its website.

6. Government grants and subsidies

Government agencies provide financing such as grants and subsidies that may be available to your business. The Canada Business Network website provides a comprehensive listing of various government programs at the federal and provincial level.

Criteria

Getting grants can be tough. There may be strong competition and the criteria for awards are often stringent. Generally, most grants require you to match the funds you are being given and this amount varies greatly, depending on the granter. For example, a research grant may require you to find only 40% of the total cost.

Generally, you will need to provide:

• A detailed project description
• An explanation of the benefits of your project
• A detailed work plan with full costs
• Details of relevant experience and background on key managers
• Completed application forms when appropriate

Most reviewers will assess your proposal based on the following criteria:

• Significance
• Approach
• Innovation
• Assessment of expertise
• Need for the grant

Some of the problem areas where candidates fail to get grants include:

• The research/work is not relevant
• Ineligible geographic location
• Applicants fail to communicate the relevance of their ideas
• The proposal does not provide a strong rationale
• The research plan is unfocused
• There is an unrealistic amount of work
• Funds are not matched

7. Bank loans

Bank loans are the most commonly used source of funding for small and medium-sized businesses. Consider the fact that all banks offer different advantages, whether it’s personalized service or customized repayment. It’s a good idea to shop around and find the bank that meets your specific needs.

In general, you should know bankers are looking for companies with a sound track record and that have excellent credit. A good idea is not enough; it has to be backed up with a solid business plan. Start-up loans will also typically require a personal guarantee from the entrepreneurs.

BDC offers start-up financing to entrepreneurs in the start-up phase or first 12 months of sales. You may also be able to postpone the principal payments for up to 12 months.

How Can I Get Money For my Business?

Thousands of Americans dream of starting a small business. In fact, 234,000 businesses started in the second quarter of 2015, according to the most recent data from the Small Business Administration (SBA).

There’s one common factor all these businesses needed to start up: money. Raising enough funds is critical to get a small business off the ground and pave the way for longevity and future success.

1. Savings

Most startup founders use their personal savings to fund their businesses, according to Forbes.

That said, don’t drain your bank account to raise funds for your business. Entrepreneurs should set aside enough living expenses (for for rent and groceries, for example) to last them for a year. This is because many startups aren’t profitable for months after opening.

Smaller, service-based businesses can probably get away with three to six months of operating expenses, according to FreshBooks.

The SBA has a number of tips for saving up to start your small business, including:

• Decrease credit card debt. Call your bank to request a lower interest rate.
• Set up an automatic deduction to your savings account.
• Get rid of any services you don’t use like gym or car-sharing memberships.
• Set up a budget using a service like You Need a Budget.
• Buy used. This includes your car and any other purchases. Look for Facebook groups in your area focused on trading or selling used items.

2. Personal Loans

This tactic involves borrowing money from family and friends. To avoid hurt feelings, put the terms of the personal loan in writing. Be clear about how much you need, what the interest rate is and when it’ll be repaid.

3. Credit Cards

You can either use your personal credit card or open a business credit card.

Even if this option is open to you, don’t choose it lightly. Credit cards often have high interest rates that increase your balance monthly. You could end up with a debt balance much higher than you planned for, which could cripple your new business.

Still confident credit cards are the best route for you? Make sure you’re using a card with the lowest interest rate possible and excellent repayment terms. Research Credit.com to find the right card for your business.

4. Bank Loans

Unfortunately, a small business bank loan is not guaranteed. Banks want airtight businesses plans and excellent credit scores before they’ll consider approving a small business loan.

They may also want you to invest your own money in the business to prove you’re really committed to making your company work.

You can go with your personal bank since they’ll already be familiar with your banking history. Or choose a bank that’s historically known for lending to small businesses. To improve your chances of getting a loan, choose an SBA-guaranteed lender.

5. Venture Capital and Angel Investors

Venture capital and angel investing is best suited to high-growth companies or companies that are already profitable with good cash flow. Still, each investor has his or her own specialty in terms of region, industry and company age.

In any case, you’ll need a unique idea and a solid business plan to attract their investment. The SBA can help match you to potential private investors through their SBIC program. Investments are typically made over a three year period.

SBIC investments comes in three forms:

1. Loans. SBIC loans range from $250,000 to $10 million, which must be paid back (with interest). Interest rates are 9 to 16 percent.
2. Equity. SBIC will give you money for your business for a share of ownership (and control). Investments range from $100,000 to $5 million.
3. Loan and Equity. A combination of the first two options. Loans come with interest rates of 10 to 14 percent and investments are $250,000 to $10 million.

6. Government Programs

Government grants can require some research to find the right one for you. Thankfully, the SBA has offices all over the United States that can coach you on available grants, plus provide business consulting and training. Grants.gov also has information on over 1,000 federal grant programs.

There are also small business grants available to entrepreneurs facing unique barriers. For example:

• Women’s Business Centres offer advice on local, state and private loans for women, especially those who are economically or socially disadvantaged.
• Minorities-owned businesses can check this SBA site that connects them to funding.
• Businesses from economically disadvantaged areas.
• Veteran’s Outreach Business Centers help match veterans to loans.

7. Corporate Programs

Select corporations offer programs that support small businesses, including low-interest financing. For example, Goldman Sachs has a program that gives affordable loans to businesses who might not qualify at traditional credit sources.

8. Crowdfunding and Crowdlending

Crowdfunding usually involves asking large groups of people for funds on dedicated crowdfunding websites. They usually receive a gift or the product you’re developing in return for their investment. Crowdlending functions much the same way except that your funders expect you to pay them back.

Here are some options:

• Kickstarter: the most popular choice. You add project details, your funding goal and deadline. You can then email family and friends with your page link. Payments to you are made via credit card. If you reach your goal, Kickstarter takes 5 percent and Amazon (Kickstarter’s credit card partner) takes 3 to 5 percent.
• Indiegogo: an alternative to Kickstarter.
• AngelList: matches you angel investors.
• Kiva Zip: ask for small loans with zero-percent interest.
• Accion: loans usually have an 11 to 16 percent interest rate, plus additional costs.

How to Get Funding For a Business Idea

Begin With Bootstrapping

When first getting started, many entrepreneurs use “bootstrapping,” which means financing your company by scraping together any personal funds you can find. This typically includes your savings account, credit cards, and any home equity lines you may have.

In many cases, using the money you have instead of borrowing or raising is a great approach—in fact, some entrepreneurs continue to bootstrap until their business is profitable. This can be beneficial because it means you won’t have extensive loans and monthly payments that bog you down, especially if you run into snags along the way.

But, if you’re looking to scale your business quickly, it can be advantageous to bring in outside sources of funding. So, what happens when your funds run out, or you decide you need something more? That will ultimately depend on the type of business you’re building, but there are some common places to start.

Consider Friends and Family

Asking your friends and family for money might seem like a daunting prospect—but tapping those closest to you is often a good first step before getting external funding. And hey, it can never hurt to ask.

While Aunt Irene is probably not in a position to finance your entire new social network for dog owners, she may be impressed enough to toss you a couple grand to help you get rolling (and join the site to find Fido some new playmates).

Before you ask your friends and family for money, though, you should have a business plan at the ready. This way, you can explain to them exactly what you’re selling, what you plan on charging, how you’ll make money, and whether you’re asking for a loan, an investment, or a gift (i.e., whether or not they should expect to get back any money they put into your business, and if so, how much).

Explore Alternative Funding Sources

If you’re looking for a relatively small amount of money (anywhere from $25 to $5,000), there are quite a few micro-loan organizations that lend to start-ups and entrepreneurs, such as Kiva and Accion.

These websites cater to low-income entrepreneurs in the U.S. or those working for social good (and some only provide micro-loans to those living below the poverty line). But if you think you might qualify, check out their websites for more information.

Another alternative are the increasingly popular crowd-funding sites, such as Kickstarter and IndieGoGo, which provide you a platform to raise money from individual, small supporters across the web. You’ll set up a campaign and name a target amount of money you want to raise, as well as create perks for donors who pledge a certain amount of money.

Then, you raise money for the campaign over a specified time period. With Kickstarter, you’ll only get to keep the money if you raise the full amount of your goal, but IndieGoGo will let you keep anything you raise (for a cut of the proceeds).

Look Local

If you’re launching a small company (vs. a tech start-up that you see as the next Facebook), you’ll definitely want to check out your local small business development center. Many universities have one, and the Small Business Administration (SBA) alone has 63 across the country.

Not only can these centers help connect you with groups of entrepreneurs for networking and angel investors for funding, they can help you determine what type of loans and funding you might qualify for and help you apply.

Your local chamber of commerce may also be a treasure trove of information and guidance in terms of where to get local funding. Many large cities have programs and organizations that exist solely to bring business into the local community.

Consider Taking Out Loans

If you can show that you’ve started gaining traction and making money (and that a loan would help you earn even more), you may be able to qualify for a traditional bank loan.

Many banks, such as Bank of America and Wells Fargo, have recently announced increased commitment to small business. While each bank and individual situation differs, this may be a good bet if you’re looking to find funding between $5,000 and $500,000.

Look to Angels

If you have a tech start-up, you’ll probably eventually need more capital to really get going—to hire people or get office space, for example—than bootstrapping and crowd-funding will afford you. You’ll likely need to reach out to outside investors.

A good place to start is angel investors, usually established business professionals with high net worths who are looking to invest in promising companies. Typically, an angel will invest anywhere from $10,000 to a few million dollars.

To find angels, ask other entrepreneurs in your network, or check out the Angel Capital Association, which counts over 330 angel investor groups nationwide. You can also look at AngelList, a website that helps entrepreneurs make connections with interested investors. So far, the site has helped more than 1,000 start-ups get funded.

In addition to making direct loans, angel investing groups sometimes host events or competitions that can help provide new entrepreneurs with additional networking opportunities. Check your local community for these groups.

Venturing into Bigger Capital

If you’re looking for some serious funding (at least $1 million), you’ll need to turn to venture capital. Venture capitalists (VCs) are more likely to require an in-depth and airtight business plan, but they can also give you larger amounts of money.

VCs typically invest in a few different companies for their clients, and hope to make money off of one (or all) of them to pay back their client’s investments. What that means for you is that they see all kinds of businesses—and you have to make yours stand out.

Also, you should know that VCs are looking for a return anywhere from 3-10 times their original investment, usually within the next 5-7 years, so it’s best to have an exit strategy in mind.

The best way to get meetings with VCs is through introductions from other entrepreneurs or investors—which means that if you’ve decided to solicit VC money, it’s time to leverage your contacts (and their networks) to see who you can talk to. Don’t have any contacts?

It’s more of a gamble, but you can also browse the National Venture Capital Association website and pitch your business to the ones you find a connection with. While cold-calling a venture capitalist may not be the easiest feat, it’s somewhere to start.

How to Get Funding For a Business Idea in South Africa

The good news is that there are several different organisations you can approach to fund your business, from banks and venture capitalists to angel investors and incubators as well as government departments and crowdfunding platforms.

Venture capital finance This is where private equity capital is used as seed funding for businesses that are considered high growth with high potential. You can access a detailed list of venture capital and private equity firms on the South African Venture Capital Association (SAVCA) website.

Some funders will provide funds specifically for research and development while others will help you finance your business so that your product is ready to take to market.

Government departments and agencies Numerous government departments and agencies offer support to start-up businesses ranging from small loans of a few thousand to loans into the millions. Government agencies to approach include:

• Department of Trade and Industry
• Industrial Development Corporation
• National Empowerment Fund
• Small Enterprise Development Agency
• Small Enterprise Finance Agency (SEFA)
• Technology Innovation Agency
• National Youth Development Agency

Some provincial and local governments and municipalities offer businesses support, for example Gauteng Growth and Development Agency (GGDA) and Western Cape Department of Economic Development and Tourism. You can approach your province or metro for support. Follow them on social media as they often announce programmes on these platforms.

You can also approach government departments such as the Department of Agriculture, Land Reform and Rural Development, the Department of Sports, Science, Art and Culture or the Department of Tourism, as relevant to your business, as they often have programmes in their field.

Business funders and incubators These businesses are set up to help individuals and companies start and run their businesses. Their services include providing finance as well as support. Some will offer finance options only, such as loans, while others will want a stake in the business or a percentage of the profits and a say in how the business is managed.

• Business Partners
• Raizcorp
• Aurik Business Accelerator
• The Innovation Hub

Some of South Africa’s largest companies also run incubators such as mining companies, banks and telecommunication companies. These may run for a few months, or a few years, so it is worth contacting them to find out about any incubator or development programmes.

Angel investors Angel investors are usually wealthy individuals who loan money to individuals and companies with business ideas they believe will succeed. You may be familiar with some international angel investors from television programmes such as Dragons’ Den.

They usually want a stake in the business, but many are prepared to invest in businesses that have potential but are too risky for a bank. South Africa has numerous angel investors like Jozi Angels. You can find many of these on the Investment Network. Remember you are not limited to getting funding from South Africa only so you can investigate international angel investor networks.

Crowdfunding

South Africans have access to websites offering crowdfunding from BackaBuddy to Thunda Fund, JumpStarter and Uprise.

Top tip: When you are registering or accepting offers always make sure to find out if there are any additional costs you need to pay to access platforms and what the exact terms and conditions are of the finance and support offered, as well as any fee or commission payable to the platform.

Bank funding

If you are starting a small business, you can approach your bank for a business loan. South Africa’s large banks all have small business departments with specialist small business consultants to offer advice and review funding applications.

Free Government Money to Start Business

In general, government startup small business grants aren’t available for starting a business, paying off debt, or covering operational expenses. And unless your business is a nonprofit or is launching a project related to areas such as technology, medical research, or education, government grants may be hard to find.

That being said, there are startup small business grants available for specific business types and owners, including:

• Innovators
• Green businesses
• Rural businesses
• Women, veteran, or minority-owned businesses
• Nonprofit organizations5

Unfortunately, typing “startup small business grants” into your search engine won’t necessarily provide you with an up-to-date or complete list of available grants organized by business type. However, you may be able to find grants for your small business by visiting specific websites and organizations, such as these listed below.

• Grants.gov
• SBIR.gov
• Small Business Development Centers
• USDA Rural Business Development Grants
• National Association for the Self-Employed (NASE)
• FedEx Small Business Grant Contest
• Minority Business Development Agency (MBDA)
• Asian Women Giving Circle

How to Apply for a Small Business Grant for Your Startup

Although startup small business grants may be difficult to obtain, there are things that you can do to increase your chances. Once you find the grant that you think is best for your business, gather everything you need to know before applying. Understand what’s required in the application, when it’s due, and anything else that may be needed.

A grant application might require an outline of your proposed work and financial data on your organization.6 Don’t be afraid to consult other experts such as your accountant or any team members who may be able to help with the application, too.

Whatever you do, just be sure to follow the parameters of the grant application and don’t leave anything out. Otherwise, you might not be considered.

How to Raise Money For a Business Without a Loan

You may not be able to obtain a bank loan for your business or a loan at terms that are acceptable depending on the stage your business is at and the risk profile of you and the sector your business is in, so casting into fresh waters may be required.

However, other forms of business debt finance are out there, whether your need is for working capital, expansion or physical growth. Alternative funding sources may be better suited to your purpose:

Overdraft: If you have a cyclical business or a fluctuating cash flow, and your funding need is short term, a bank overdraft facility that you can pay interest on as you draw down could be a good solution.

Invoice finance: If you have invoice payments that are due to you from pretty solidly run and financially secure companies that are taking a long time to pay, you can essentially sell off your invoices for a straight advance or via an auction platform, like Market Invoice for example, and get a large percentage of the money due upfront, with the rest to follow, in exchange for admin fees and interest costs.

Merchant cash advance: If your business takes credit-card payments, then you can borrow against future revenue on a short-term basis.

Peer-to-peer loans: A bit like crowdfunding for debt, peer-to-peer lending lets people lend to businesses in return for better interest rates than they get elsewhere. Your business stands a better chance of getting some funding in quicker and maybe at a better rate than through a bank loan.

You need to put some information around key business data on the site, and there is an underwriting process, but the concept is increasing in popularity, with platforms like Funding Circle leading the way.

Asset finance: Asset-based funding lets you borrow against the value of an asset you need to acquire, be it equipment, premises or stock. You can approach specialist providers such as Close Brothers, or most banks have a separate asset finance firm.

Family lending: One alternative to a traditional bank loan is a loan from the bank of mum and dad or some other family member willing and able to lend your business some money. Often you get this money at a much more favourable rate than you’d get in the open market. Just remember to get it all agreed in a legal document.

Equity: If you’re happy to sell a stake in your business, then equity finance could be an answer. It comes in a variety of guises from individual or small groups of business angels to venture capital funds, crowdfunding platforms and private equity houses.

Angel investors come into your business earlier than most equity investors, and for smaller amounts, making the most of the UK tax-incentive schemes for investors. Venture capitalists sometimes come in at a relatively early stage in your business but are more likely to be your second significant round of funding.

Private equity firms tend to come in much later, as you prepare for a stock exchange listing or some other kind of exit, and for much larger amounts, with many of them starting to invest at the £10 million mark.

Crowdfunding: You can harness the power of the masses by offering shares or rewards in your business in exchange for funding using crowdfunding platforms such as Seedrs, Crowdbnk and Crowdcube. The bonus byproduct is widening your market exposure and gaining additional customers.

Business Funding For Startups

If you have a tech-based idea, you may have an easier time attracting attention from venture capitalists or angel investors, but as more companies work that angle, finding an investor is harder than ever. So how can you get your business off the ground?

1. Friends and Family

Borrowing money from friends and family is a classic way to start a business. While it may be harder to convince investors or banks of the quality of your idea, your family and friends often believe in your dream.

They may be more willing to help fund your company. If you do go to friends and family for loans, it’s a good idea to make sure that each of you gets sound legal advice, especially if you are taking the money as a loan.

The downside? Borrowing money is a quick way to lose friends and sour family relationships. Be careful if you decide to proceed this way.

2. Small Business Loans

Some banks specifically offer loans to small businesses, but banks historically are careful about giving money to small companies. It can be difficult to qualify. There are alternative lending companies, however, who may be better equipped to help you get your business off the ground.

The downside? Some of those alternative lending companies are predatory. Make sure you know who you’re borrowing from before you sign on the dotted line.

3. Trade Equity or Services

Looking to get some web design done? See if you can barter with your neighbor who does some freelancing on the side. Perhaps you’ll help him with some marketing advice down the road. In virtually every city, there are communities of fledgling business owners who can work together.

The downside? Trading services or equity can be an awful way to make a living, and so not everyone is willing to do it. Don’t be offended if your Number One choice says no way.

4. Bootstrapping

One of the most common ways to get a business up and running is through “bootstrapping.” Basically, you use your own funds to run your business. This money may come from personal savings, low or no interest credit cards, or mortgages and lines of credit on your home. 

Getting a free credit report card will help you assess where you financially stand.  Knowing this will help you figure out the interest rate you will get on loans, which can give you access to affordable credit.

The downside? If your business doesn’t succeed, you may have a substantial amount of debt that you now need to manage.

5. Incubator or Accelerator

Business accelerators and incubators have sprung up all across the country, particularly near colleges with a strong business program. These spaces are part communal workspace and part mentorship development centers. Young businesses can get a great start here while partnering with some amazing people.

The downside? They are often focused on tech-heavy businesses, so you might struggle to find one that works for your company.

6. Crowdfunding

If you have a sexy idea and you’re great at social media, crowdfunding might be an option. When websites like Kickstarter and Indiegogo first started, there were a number of businesses that had great success pulling together funding through their reach.

The downside? Lots of companies aim for crowdfunding, so you have to generate a lot of buzz to make it through the overall signal noise. It’s also very possible to overextend yourself and frustrate backers, which can lead to a great deal of animosity before your company is even really off the ground.

7. Small Business Grants

The Small Business Administration as well as other organizations sometimes offer grants to small businesses that are run by women, minorities, or veterans. If you fit into one of these categories, it’s worth speaking to your local SBA chapter, or Chamber of Commerce, to see if there’s local grant money that you may be able to apply for.

The downside? Check carefully to make sure you won’t need to pay the money back, or agree to certain conditions down the road. Not all grants have stipulations, but it’s good to know what you’re agreeing to before you accept the funds.

8. Local Contests

Let’s face it; unless you have an incredible idea and a strong business history, you’re probably not going to make it onto Shark Tank. Many local COCs and SBAs have decided, however, to run local Shark Tank style competitions. Since these are more locally focused, often requiring that a business operates in a particular area in order to enter, they may be less competitive.

They are also a great way to practice your pitch for other investors. Generally, you won’t lose anything but time for trying. And even if you’re not the number one choice, you may spread awareness of your business.

The downside? You could invest a lot of time into your business plan and investor presentation, but not be chosen for one of the prizes. That work will probably benefit your business, however, so it’s hard to really count this as a downside.

9. Keep Your Day Job

This is the suggestion no one likes.

If you currently have a job that is meeting your expenses and letting you live a relatively comfortable lifestyle, don’t be in such a hurry to quit your job and follow your business dreams. Spend some time getting the business off the ground and building through the early, difficult phases with the solidity of your 9-5 job paying your bills.

This lets you build your business with fewer compromises, and lets you stay true to your vision without needing to give in to financial pressure. You can also get a great experience from your day job to help you run your company down the road.

The downside? It is possible that you’ll miss opportunities by focusing on your day job and running your company as a side business. You might also be unable to devote the necessary time and energy to really engage with the project and get it off the ground.

Free Money to Start a Small Business

Small-business grants provide free money for startups and existing businesses, including those impacted by the coronavirus pandemic.

It can take time and effort to research and apply for funding. To help you start, here’s a list of federal, state and private small-business grants and resources.

Coronavirus small-business grants

The U.S. Small Business Administration introduced new coronavirus small-business grant programs as part of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act:

Shuttered Venue Operators Grant: The SVO Grant program offers $15 billion in business grants to live performing arts institutions, movie theater operators and other eligible shuttered venues. Applications for the SVO grant opened on April 8. Businesses must have been in operation as of Feb. 29, 2020, to qualify.

Targeted Economic Injury Disaster Loan Advance: The SBA provides Targeted EIDL Advances of up to $10,000 for small businesses in low-income communities experiencing a loss of revenue due to the coronavirus crisis. The advance works more like a grant than a loan, as it does not need to be repaid. The SBA will reach out to eligible businesses.

Restaurant Revitalization Fund: Restaurants and other food establishments that lost revenue due to the pandemic were able to receive up to $10 million in funding from the RRF. Applications for this program closed on May 24.

Federal small-business grants

Government agencies are among the biggest distributors of business grants, supporting a range of enterprises from environmental conservation to child care services. Applying may seem intimidating, but federal grants are great opportunities for small-business owners looking to grow.

Grants.gov: Grants.gov is a comprehensive database of grants administered by various government agencies, such as the U.S. Department of Education and the Department of Veterans Affairs.

Small Business Innovation Research and Small Business Technology Transfer programs: The SBIR and the STTR grant programs focus on research and development for technology innovation and scientific research. The programs help connect small businesses with federal grants and contracts from 12 government agencies.

To qualify, you must operate a for-profit business, have no more than 500 employees and meet other eligibility requirements.

USA.gov: You won’t find any federal small-business grants here, but this government website provides resources for starting or growing a business, including a link to GovLoans, which has information on the types of available federal small-business loans.

State and regional small-business grants

Economic Development Administration: This U.S. Department of Commerce agency provides grants, resources and technical assistance to communities to support economic growth and encourage entrepreneurship and innovation.

Each state’s agency helps businesses find financing (including state or regional grants), secure locations and recruit employees. You can search the economic development directory for regional offices and local resources.

Small Business Development Centers: Your local SBDC provides support for small businesses and aspiring entrepreneurs. They’re often associated with local universities or the state’s economic development agency, and many can help connect business owners with financing opportunities, as well as counseling, training and technical assistance.

Corporate small-business grants

Many corporations and large companies have a philanthropic component that includes small-business grants. While some provide grants only to nonprofits servicing specific industries, some give to for-profit companies.

FedEx Small Business Grant Contest: The company’s annual grant competition awards $250,000 to 12 small businesses, including a $50,000 grant and $7,500 in FedEx print and business services to its grand prizewinner. The 2021 contest opens on Feb. 16.

The contest is open to U.S.-based for-profit small businesses that have been operating at least six months, with no more than 99 employees.

National Association for the Self-Employed: NASE members can apply for monthly small-business grants worth up to $4,000, as well as an annual $3,000 college scholarship for members’ dependents. Grants are awarded year-round, with completed applications reviewed quarterly in April, July, October and January.

Specialty small-business grants

To help spread entrepreneurial success across demographics, many organizations focus their funding efforts on specific communities.

Crowdfunding For Startups

There are sites where people can invest in your project, idea or business. Crowdfunding sites are all over the internet these days. Below we have gathered together the best crowdfunding sites for you whether you’re funding a startup, creative endeavor or raising money for a cause or project, there will be something on this list for you.

1. Kickstarter

Kickstarter helps creators connect with the resources they need to bring their ideas to life. The company has helped 15 million artists, musicians, filmmakers, designers and other creators raise $3.7 billion to successfully fund more than 143,000 projects.

It is an all-or-nothing situation with funding as you have to meet the goal you set within the allotted time or everyone gets their money back.

It is free to create a project campaign on Kickstarter but if you successfully get funded a 5% fee is owned from your collected funds. You will also get charged processing fees between 3-5%.

2. Indiegogo

Indiegogo doesn’t just offer both live crowdfunding campaigns, but they also have a marketplace for innovative products. They have helped entrepreneurs raise $1 billion for more than 650,000 projects. Find out if your idea has legs and raise starter capital with Indiegogo’s “global network of early adopters”.

With this platform, you don’t have to stop raising money at a specific time. There are no fundraising targets or deadlines and you can apply equity, offer securities, revenue sharing and even cryptocurrency sales.

Indiegogo charges a 5% platform fee for all projects. If you’re raising money for a cause, you don’t have to pay any fees with Indiegogo’s sister platform – GoFundMe.

3. Crowd Supply

Whether you want to bring a family recipe to market or build electronics, Crowd Supply can help you. Their mission is to “bring original, useful, respectful hardware to life” has come to fruition with 70% of its launched projects being successfully funded (2x more than Kickstarter). The average amount raised per successful project is $66,000 (6x more than Kickstarter for comparable projects).

You can choose from a variety of Crowd Supply payment plans. The Standard Plan is 5% of gross campaign sales not including processing fees, the Guided play is 5-10% and the Custom plan 10—15%. Features differ per plan and include campaign management, media asset creation and a dedicated PR team.

4. Crowdfunder

Join Crowdfunder to connect to a community of 200,000 entrepreneurs and investors. This community offers equity crowdfunding which means that entrepreneurs sell shares of their company to accredited investors. They have raised over $150 million dollars from 12,000 VCs and angel investors to help all sort of startups from Pre-Seed to Series A.

Crowdfunder offers Free, Starter ($299/month) and Premium ($499/month) plans each with a variety of services like document storage and personalized support.

5. Experiment

This is the platform to fund scientific discoveries. Experiment backers fund projects that “push the boundaries of knowledge” like dinosaur fossil evacuations to the historical study of medieval monasteries. They fund project scientists without the overhead costs they would have to otherwise face with university grants (which can be 50-60%).

It is free to start a project but once you receive full funding Experiment charges an 8% platform plus payment processing fees between 3-5%.

6. Chuffed

Chuffed helps social causes aimed at helping animals, your community or the environment. This platform is for not-for-profit companies and cause-based organizations exclusively. Their most successful campaigns have raised an average of $7,000. Nearly 8,000 campaigns have collectively raised $18 million.

Donors pay your processing fee. So, a $100 donation would require a $3 fee from the donor. Plus, all donors are encouraged to make a small donation to Chuffed too.

7. Patreon

Patreon helps artists, musicians, writers and more get paid by running a membership business for their fans. This stream of revenue comes from fans paying you a subscription fee of their choosing in exchange for exclusive experiences and behind-the-scenes content. Creators have raised $350 million and the average patron pays a monthly fee more than that of Netflix and Spotify.

The fee is 5% of successfully processed payments. There’s no payment processing fee each time a payment is processed but it is batched at the end of each month. There are also payout fees charged for moving funds from your creator balance to your bank or PayPal account.

8. Fundable

Create a profile on Fundable and then choose a program. Consumer-facing companies can raise up to $50,000 with their rewards program that allows entrepreneurs to sell their products, taking pre-orders and selling merchandise.

For companies looking to raise $50,000 to $10 million for their product, service or B2B business, they have the equity program that allows them to seek investment from accredited investors.

It is free to create a company profile and $179 per month to fundraise. There are no success fees but for rewards-based raises there is a processing fee of 3.5% + $.30 per transaction.

9. WeFunder

With WeFunder you can raise between $50,000 and $50 million from investors. Most campaigns take between one and three months to reach their goals. From a small restaurant to tech startups, you will be able to solicit funds from more than 150,000 WeFunder investors.

It is free to create a WeFunder profile and they don’t charge management or transaction fees. Administrative fees are charged to investors to cover all the costs of operating WeFund.

10. SeedInvest

SeedInvest works to high-growth, professional and early-stage companies to raise either preferred equity or convertible note funding. For priced rounds of equity, you will need to provide the pre-money valuation. For convertible notes, you will need to provide the valuation cap, conversion discount, interest rate and term length.

To use SeedInvest, you will need to create an application, make it through the screening committee and conduct your due diligence before making a profile. This a platform for companies ready to make it big and you should expect the process to take a minimum of 60 days to complete.

There is a 7.5% placement fee charged on the total amount raised and it’s only paid on the successful completion of your campaign. You can also expect a %5 warrant coverage based on the amount raised and up to $10,000 in due diligence, escrow, marketing, and legal reimbursement expenses.

11. Fundly

Fundly advertises on their homepage that they “raise money for anything” with no raise requirements and startup fees involved. They funded everything from personal health needs to politics and even trips. Simply create a page, manage your campaign from the Fundly app and use Fundly’s Facebook OpenGraph to maximize your reach.

There is no minimum amount you need to raise to keep the money you have raised, payments can be withdrawn within 48 hours of a donation and automatic transfers can be arranged.
Everyone pays a 4.9% platform fee plus a 2.9% credit card process fee and $.030 per transaction (depending on your country).

12. LendingClub

With LendingClub you can get a personal loan of up to $40,000 and business loans up $300,000. LendingClub is not a bank rather they connect borrowers with investors. Investors purchase notes that correspond to fractions of loans, in exchange for some solid returns.

LendingClub facilitates every transaction and screens all borrowers. When you have a business loan through LendingClub you will get your capital upfront on one to five-year terms with no monthly payments and prepayment penalties.

LendingClub is recommended for large, one-time expenses. It is also required that your business has been around for at 12 months, have annual sales of at $50,000, no recent bankruptcies and ownership of at least 20% of the business.

There is an origination fee of between 1.99 and 8.99% and totally monthly payments per $10,000 borrowed of between $227 and $955 with total annualized rates of 9.77% to 35.1%.

Who Qualifies For SBA Grant?

Small businesses impacted by COVID-19 may be eligible for a Targeted EIDL Advance (grant) of up to $10,000, as well as a Supplemental Targeted Advance of $5000. These grants do not have to be repaid. The SBA is now encouraging all eligible businesses to apply.

To be considered for one of these grants, your business must meet the eligibility requirements (see below) and apply (or have applied) for an Economic Injury Disaster Loan (EIDL). However, you do not have to get or accept the loan to get the grant.

To qualify for the full $10,000 targeted EIDL grant, a business must: 

• Be located in a low-income community, and
• Have suffered an economic loss greater than 30%, and
• Employ not more than 300 employees

In addition, the business must qualify as an eligible entity as defined in the CARES Act:  

• A small business, cooperative, ESOP Tribal concern, with fewer than 500 employees;
• An individual who operates under as a sole proprietorship, with or without employees, or as an independent contractor; or
• A private non-profit or small agricultural cooperative.
• The business must have been in operation by January 31, 2020
• The business must be directly affected by COVID-19

Economic loss is defined as “the amount by which the gross receipts of the covered entity declined during an 8-week period between March 2, 2020, and December 17, 2021, relative to a comparable 8-week period immediately preceding March 2, 2020, or during 2019.”  The SBA will develop a formula for seasonal businesses. 

Can I Get a Government Grant to Start a Business?

The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise, and to maintain and strengthen the overall economy of our nation.

Read Also: How to create a Business Plan

Although the SBA has grown and evolved in the years since it was established, the bottom line mission remains the same. The SBA helps Americans start, build, and grow businesses.

The Small Business Innovation Research Program (SBIR) is a highly-competitive program that encourages small business to explore their technological potential and provides the incentive to profit from its commercialization.

By including qualified small businesses in the nation’s R&D arena, high-tech innovation is stimulated and the United States gains entrepreneurial spirit as it meets its specific research and development needs. SBIR targets the entrepreneurial sector because that is where most innovation and innovators thrive.

However, the risk and expense of conducting serious R&D efforts are often beyond the means of many small businesses. By reserving a specific percentage of federal R&D funds for small business, SBIR protects the small business and enables it to compete on the same level as larger businesses.

SBIR funds the critical startup and development stages and it encourages the commercialization of the technology, product, or service, which, in turn, stimulates the U.S. economy.

The Small Business Technology Transfer Program (STTR) is an important small business program that expands funding opportunities in the federal innovation research and development arena.

Central to the program is an expansion of the public/private sector partnership to include the joint venture opportunities for small businesses and the nation’s premier nonprofit research institutions. STTR’s most important role is to foster the innovation necessary to meet the nation’s scientific and technological challenges in the 21st century.

Conclusion

You should not in any way allow money to keep you from chasing and accomplishing your industrial dreams. As an alternative, use ingenuity and you will soon find out that you boast more than sufficient money to set up and thrive your novel business venture.