How to get the funding for a Business

The business owner will have to secure funding sometime during the life of his business in order to grow or to keep the company operating. Planning to fund a company is however, not a trivial or a short topic. The reality is that a detailed debate that we at USA Funding Pros are happy to have with you. We can offer you a summary, which in turn, we hope this will help you think about these options for your company.

Moving on, there are two ways for how to get funding for a business:

• Debt and equity. The lender receives a notice when the debt is used. The note states the terms and conditions of the loan, including the time period and the interest rate. The advantage, using debt means that the business retains its ownership. The downside is that you have a responsibility of repayment. When you fail to fulfill your agreement, the lender will liquidate your company forcefully, as per certain circumstances.

Using money instead.

A shareholder who uses his equity to fund a business, passes along a shareholding to an investor in exchange for cash. The downside of this, is that the lender is not obligated to repay the debt. The other downside is that the owner will give up a part of his ownership in the business. This can lead to the loss of control in the company.

1. Receivable Exchange

This option allows the owner to sell directly in cash their accounts receivable for a third party (that is  Receivables Exchange). It’s an industry with a net worth of $160 billion that dates far back to ancient Babylonians. Please note that factoring can be expensive because it could cost up to 16 percent, of the accounts receivable. As this may work for many enterprises, but this does not fund a business that shrinks or consistently loses money.

2. Pension accounts

Borrowing money or withdrawing from your 401(k) Pension can be risky. Firstly, try to find a sixty day interest free loan. There are no penalties charged if the money is repaid during this time period. Note:

• This is your only retirement money, therefore if you should lose your company, it’s risky and can be potentially devastating.

3. Government grants

Research must be done at local, and state, and federal level and it is required for these types of programs. Steve says that these departments include, the USDA, the Department of Commerce and the Department of Treasury. The abbreviated names for these are SBIR, SBIC and STTR. Remember: They are usually very detailed and technical and come with reports you need to do.

4. Peer to Peer Loans (P2P)

You are now able to visit websites such as, Prosper.com as well as Lending Club online, to ask for money from people you haven’t met. The loan amount that will be offered depends on what your credit value is, the economy, time period and of course, “your story.” Please keep in mind: P2P loans aren’t easy to obtain and interest rates may be very high.

5. Crowdfunding

Now you can ask people to invest in “your cause,” exchanging P2P (other than money) for some other way. This could be another funding option, and the funds raised will not need to be paid back. Starting with your first items and then creating an item, the follow-up with these people is called ‘donors.’ IndieGoGo and Kickstarter are both very common websites that encourage crowdfunding. Remember: crowdfunding can be highly emotional, and you can rely on your ideal appeal for support.

6. Business Incubators

Though this is fairly recent in the United States, these small loans are giving up to $10,000, and they have become more common. These are focused on your know-how, your zeal, your ability to succeed and sell. Note: If you have an interesting idea and need a small amount of money this could be a good choice.

7. Producer or wholesaler financing

This approach works with your supply chain to get the money that you need. Sometimes it works better with a smaller local supplier who is willing to work with you and really wants your product. Tony Hsieh, CEO of Zappos, said this form of funding is crucial to the growth of the company. Remember: Don’t personally guarantee this loan.

8. Company plans or other contests

Contests aimed at winning the money when everything else fails. Many regional and national competitions donate large amounts of money. These include the Amazon Web Services $100 K Enterprising Competition, The GE Ecomagination Challenge, and the Start Up Challenge. Remember: These organizations enjoy a brilliant concept and a highly trained team. You do need to be a good presenter as well.

9. Barter

If your company is new, you can start with seed capital, mentoring and similar services. These business models, which include Excelerate Labs and TechStars, have a long track record of success. Remember: There’s plenty of competition these days to join the incubator so concentrate on a few organizations that best match your goals for how to get funding for a business.