Did you know that small businesses help drive the US economy? According to the Small Business Administration, small businesses create jobs which helps encourage economic growth. So, just how do you fund your small business idea? Through a great support system of financers, small businesses can achieve funding through angel investments, capital lenders, and small business loans. Firms like Advantage Capital Investors make it possible for small businesses to secure the funding they need to get off the ground, create jobs and help communities (see Advantage Capital Partners blog Advantage Capital Impact).
Angel investors are well established individuals with a net worth of at least $1,000,000 who believe in your business and want to see it grow. These individuals can sometimes be seasoned entrepreneurs and former business associates whom can also offer their expertise along with the capital your business may need for startup, product development, or marketing strategy.
Angel investors generally invest according to the SEC guidelines of accredited investors, and you provide them with equity or shares in your business. According to Entrepreneur (2014) there are a few things to keep in mind when pitching to angel investors: (1) have a perfectly mapped out plan for their investment growth. (2) the best pitches are elevator pitches that adequately describe the market the business is in, explains what the problem solves, and demonstrates a clear track record. And (3) entrepreneurs should offer sound financial projections and talk boldly and confidently about how your business is going to make money. To find angel investors to invest in your small business, simply visit the Angel Capital Association’s online listing as well as other organizations affiliated with the ACA (Entrepreneur, 2014).
Small Business Investment Corporations
SBIC’s are privately-owned and managed investment firms that provide venture capital and start-up financing to small businesses that have a net worth of $18 million or less and have an average after tax income of no more than $60 million. To apply for funding from an SBIC, entrepreneurs need to provide a business plan that explains the businesses operations, management, financial condition, and funding requirements. Places to search for SBIC’s include the Small Business Administration’s web site and the National Association of Small Business Investment Companies website.
Small Business Loans
The Small Business Administration helps entrepreneurs secure business loans with third party lenders. The SBA offers a variety of loan programs to help small businesses, such as general small business loans, microloan programs, real estate and equipment loans, and more. To apply for a small business loan through the SBA, entrepreneurs should simply submit a loan application. Other SBA financial assistance for small businesses include surety bonds and help finding venture capitalists. For more information on securing a small business loan through the SBA visit the SBA website.
Reference: Entrepreneur Media