The 3 Top Funding Options for Startup Business Owners

Funding Sources For Small Businesses

Do you want to grow your business? You’re likely going to need some financing. Some opt to self-finance, which can slow growth and cause your business to fall behind the competition.

There are more options for small businesses to find financing. The approval rate for small business loans hit 27.5%, which is a record. The reason is that small businesses have more financial options than ever before.

Keep reading to discover the top funding sources for small businesses and learn how you can get approved.

The Basic Types of Business Types of Financing

As you look at funding sources, you’ll find that they fall under two categories. First, there are debt-based financing and asset-based financing.

You might be more familiar with the terms used in consumer financing: secured or collateral loans and unsecured loans.

Asset-based lending is the same as a secured loan or a collateral loan. It’s guaranteed by some assets, such as property or equipment.

Debt-based financing is similar to an unsecured loan. Nothing guarantees a loan will get paid back, but your word and credit history. Debt-based funding tends to have stringent approval requirements and higher interest rates than asset-based financing.

The Top Funding Sources for Small Businesses

Once you understand the categories of funding sources, you can find a loan that fits your needs. Here are the top funding sources to look at first.

1. Community and Economic Development Grants

If you’re opening up a physical location, you may be able to get an economic development or community grant.

Cities across the country are looking at ways to encourage small businesses to open up in distressed areas or to revive downtown areas.

As an incentive, they’ll give businesses grants you can use as startup funding or take your business to the next level.

You’ll want to connect with your local small business center or municipal economic development office.

2. AR Funding

What do you do if you’re a small business and don’t own property or significant equipment? How can you get an asset-based loan? For example, you could leverage your accounts receivable account and use that as a form of collateral.

This article from YourFundingTree.com explains how accounts receivable funding works and when it makes sense to pursue this type of funding.

3. Venture Capitalists

One of the businesses’ top funding options is getting a venture capitalist to invest in the industry. You give up a portion of the company to obtain financing. In addition, that venture capitalist could provide business insights and connections you may not have.

You have to choose the right venture capitalist fund. It’s almost like entering into marriage because both parties have much at stake.

Fund Your Business

This is a great time to get your business with small business financing. The top funding sources are either asset-based or debt-based. You want to ensure you choose the right one to fit your needs.

Check out this site often for more financing tips.


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