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This week is the SBA's Small Business Week, so we'll be featuring legal advice for small businesses all week long. Today's topic is funding -- the thing you need right after you have your big idea. There are more sources for startup capital than ever, but which is right for your business?
Here are a few tips if you're looking for startup or small business funding:
Know Where It Comes From
Like we said, there are a variety of ways to finance a small business, from SBA loans and home equity loans to raising money from friends and family or venture capitalists. With so many sources of capital there's bound to be one that fits your small business's needs, and you've got to discern those first.
If you're just starting out, some purchases may need to go on a credit card. But more established small businesses might consider stock offerings to raise money. Either way, you should know the pros and cons of each type of funding.
Know What's New (and Old)
Crowdfunding campaigns are all the rage. Sites like Kickstarter and GoFundMe make reaching more people and aggregating capital incredibly easy, and new SEC regulations make the process easier for small businesses. And there are more and more lenders out there, including non-traditional sources like the payment processing company Square.
But not all businesses need disrupting -- sometimes an old fashioned loan from a bank you trust will do.
Know What to Do (and What Not to Do)
With so many funding sources you have more opportunities to raise capital than ever before, but you also have more ways to make funding mistakes. Figuring out when, and when not, to bootstrap your own business is essential, as is knowing why it might be a good idea to avoid angel investors.
If you're considering funding options for your startup and small business, a commercial attorney could help -- you can contact one today.
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