“Your time is limited, so don’t waste it living someone else’s life.”
Other Options for Funding
- Government Small Business Grants
- Federal Grants, via Grants.gov — A database of all federally sponsored grants, where you can filter the results on the left side of the page to view grants specifically for small businesses.
- Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) — The Small Business Association facilitates two competitive programs that provide grants to small businesses that contribute to federal research and development. Eleven federal agencies, including the departments of Agriculture, Defense, and Health and Human Services, post grant opportunities on their websites. You can search all grant opportunities on the SBIR website.
- State and local — Because federal small-business grants are limited in number and often are competitive, you may have better luck searching for grants at the state and municipal levels. You’ll have to do your own research to pinpoint specific grant programs in your area, but here are some places to look.
- Economic development agencies — Every state and many cities have economic development agencies that are focused on promoting a strong local economy. Even if the agency itself doesn’t offer a small-business grant, they can often refer you to somewhere that will be helpful.
- Competitions
- Whether you are a minority owner, or an inventor, there is sure to be a competition for your specific niche. There are hundreds listed at www.startupcompete.co and www.BizPlanCompetitions.com.
- Rewards-based Crowdfunding
- This takes time and effort, but can be highly rewarding if you need feedback as you build your campaign. The best known platforms are Indiegogo or Kickstarter.
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Debt Financing – Money is borrowed from a third party, most often a bank. The borrower is asked to repay the load on a set amount of time, WITH interest. Sometimes this process is simple, and online (via sites like Lendio and Kabbage); others are more formal, and exactly like taking out a mortgage on your house.
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Equity Financing – Rather than go into debt, you sell shares or stock in your business to outside investors. You give up partial control of your business, BUT you are not taking out a loan and likely not having to deal with any credit review process.
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Seller Financing – In lieu of a lump sum at closing, the buyer pays down the purchase price owed monthly over a specified amount of time. Most of my sellers offer this option. It is of little risk to them: if the buyer/borrower defaults, the seller gets his business back. Some sellers do well with a short term annuity, which can replicate a similar cash flow as when they ran the business. If a seller is relocating, or heading into another business, then this option is less attractive. Other benefits usually include a lower rate and risk.
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