Did you know that lack of funding is one of the most common reasons new businesses fail in their first year? If you’re considering getting business financing for your startup, here are six options that will help with your expansion. Read on to learn which type is best for you and your company. 

Funding from Personal Savings

Many people kickstart their businesses using their personal savings. You can use your own cash or with collateral on your assets to prove to investors and lenders that you plan on making this business a long-term commitment. 

Love Money

Love money refers to the donation of a loved one, specifically your spouse, parents, or friends. In business terms, this is called “patient capital.” 

Borrowing love money does not exempt your friends and family from having equity. They might want to build a business relationship with you and profit from your startup.

Angel Investors

Angel investors are interested people with surplus cash who want to invest in a startup. These individuals usually work in groups of networks to offer mentoring and advice besides capital. They also work to assess the business proposals before investing.

Did you know that Yahoo and Google were successful because of angel investors? Most angel investors expect a maximum of 30% equity, taking more risks in exchange for higher returns.

Venture Capital

If your business has passed the startup period, venture capital funding might be the ideal choice to help you achieve business goals. It’s also suitable for companies that require an enormous amount of capital for expansion. 

Venture capitalists are professional investors who are involved in decision-making and business management. They take part in setting targets and milestones for the business. Like angel investors, they also advise business owners. 

Government Grants

Many government agencies offer financings like subsidies and grants to help a company grow. Check the website of your country’s government for a list of different programs. They may also offer federal, provincial, or city grants. 

Business Loans

Loaning or debt financing is another excellent option for different types of startup companies. Partner with an organization that will connect you with a suitable lender based on your revenue and how much you need. 

This funding comes with interest, whether personal, traditional business, or other loan types. You have to prove to the credit unions that you meet the requirements and can pay them. 

How to Choose the Right Funding

Pursuing funding is a huge decision, so weigh your options thoroughly. The choice depends on what your business can offer and what you are willing to give up in exchange for financing. 

If you don’t have prior business experience, relying on love money or angel investors is much better. They will likely be the most welcoming and trusting people whose interest rates are lower than you expect. 

A loan might make sense if you’ve already built your experience as an executive. That means you now have enough industry knowledge, can maintain employee relations, and keep a firm budget plan.

Most lending institutions offer startups short-term and long-term loans. Contact us today so we can help you connect with a suitable lender in our partner network.