1. SBA Loans—Embracing Your Business’s Best Ally

One of the best friends your business can have is the federal Small Business Administration, or SBA, primarily due to its exceptional loan programs. Whether you are starting a new venture, managing an ongoing business, or facing an unforeseen emergency, SBA loans have got you covered. These loans typically offer affordable interest rates and favorable repayment terms, making them a smart choice for any small business owner.

You can also get help from the Small Business Development Centers program, a cooperative effort between the SBA and the private sector, the educational community and federal, state and local governments. Among other services, the SBDCs assist in finding access to funding.

To explore further, head over to the SBA website.

2. Partners and Investors—Sharing the Load

Many successful businesses are started by cash-strapped entrepreneurs who find partners or investors. These partners can be either active or passive.

An active partner is exactly what it sounds like. The new partner invests money for a share of the business and takes an active role in running the business. The active partner invests real equity, or funding, while the original business owner invests “sweat equity.” With active partnerships, the good news is also the bad news: You will have a partner with an equal say in running the business.

When taking on a passive partner or investor, the entrepreneur is typically willing to do all the work in exchange for a cash infusion by the partner. Passive partners, also known as silent partners, are not involved in running the business.

Start by deciding what sort of partner you want, active or passive. Then cast a wide net. Speak to friends and relatives about your plan and needs. Network offline and online—social media is a great place to find a potential partner. Finally, search online for the many different angel investor platforms that have popped up, such as CoFoundersLab.

3. Crowdfunding—Embracing a New Paradigm

Traditionally, there have been two ways to fund a business:

• Take out a loan which is called, not surprisingly, debt financing, or
• Sell a share of the business to a partner or investor, which is called equity financing.

While both options work fine, neither one is perfect. Many entrepreneurs want to avoid taking on debt, while others want to avoid having to answer to a partner.

The solution for them may be crowdfunding. Crowdfunding is a new(er) alternative that revolutionizes the funding process by eliminating the need to take on burdensome debt or giving away part of your business to a partner. Instead, you entice a crowd to invest in your business by offering them unique rewards in exchange for their contributions. For instance, a food truck might name a sandwich for a month after an investor pledges $500.

Websites like Kickstarter and Indiegogo are excellent platforms to explore this innovative approach.

4. Business Plan Competitions—Unleashing Your Vision

Business plan competitions have become a trend, and it is easy to see why. By holding a business plan competition, a city or region can attract new business, jobs and revenue.

How do they work? Think about the show “Shark Tank,” and you are on the right track. Startup entrepreneurs pitch their business plans and visions to investors eager to finance new businesses.

As an entrepreneur, you can potentially win substantial cash rewards for your well-crafted business plan. With prizes often reaching five or even six figures, it is worth searching for such competitions in your city or region. A quick Google search combining your location with “business plan competition” can lead you to exciting possibilities.

5. Microfinance—Pursuing a Viable Smaller Option

If you require a relatively small amount of capital or your credit history raises concerns, microfinance might be your ideal solution.

Here, entrepreneurs can get very friendly loans for say, $2,500 and up. Microfinance loans are made by local Community Development Financial Institutions and nonprofits such as Kiva. In addition, the SBA offers expedited microloans of up to $50,000.

The Bottom Line

The key is not to let financial constraints hinder your entrepreneurial dreams. Instead, explore these five avenues. The money is out there. Remember, where there’s a will, there’s a way.

That’s what being an entrepreneur is all about!

To learn more tips for running and growing your small business, visit the resource page at Index by Pinger.