Ideally, there is no age limit or minimum age requirement to become an entrepreneur. You will come across several names such as Mark Zuckerberg of Facebook, Matt Mullenweg of WordPress, and Steve Huffman and Alexis Ohanian of Reddit who started their business career while they were still in college. Now each of them has an empire of their own.
If you want to follow in their footsteps you will however have to face and overcome one of the most common difficulties that almost every new business owner faces. This is the access to funding. According to a survey conducted by the Federal Reserve Bank of New York about 58% of all new companies face challenges in getting the required capital to help them grow in their business.
Part of the reason for such difficulty in qualifying for a business loan is that the lenders are often unwilling to work with a new company. Ideally, most lenders and bankers will require your company to be in operation for at least one year or two before you can apply for a loan.
Any small business entrepreneur will find a lot of useful and effective sources to fund their business. Apart from the traditional loans, there are different grant programs as well that are offered by the government. You can even choose to avail a few specific types of subsidies that are specifically designed for small business entrepreneurs.
One significant difference between traditional loans from banks and other lines of credit to these different grant programs is that you will get access to professional advice and support apart from the funding, especially in the critical stages that you may face early on while establishing your business.
You will get funding of up to $5,000 in specific cases excluding GST if you are eligible as a business to engage an advisor, a consultant, or a business coach for a period of up to 3 months. This will help you a great deal to establish and even develop your business.
Therefore, to be sure that you never face any cash crunch while operating you must find out which grants, programs, or business loans are best for your business and will help you to launch your startup.
Different Financing Options
There are a lot of different financing options for new entrepreneurs though it may seem at first that it is a critical issue. Luckily, there are several other alternative ways to get your startup business financing without the need to take out a business loan. Here are the options.
Angel Investors: This is one of the best sources of financing your new business. These wealthy people have no shortage of money. Apart from the financial aid you will also get their business advice that will help you to cut production costs and also make the best use of their wide network of contacts in the industry. Simply post your business idea on sites like Angel Investment Network to find an angel investor.
Business Accelerators: They will help you expedite the process to become a successful enterprise quickly from a startup. They will also help you to secure financing for your business either from traditional banks or even from other relevant and reliable sources such as Liberty Lending USA and the like. If you avail of a business accelerator program you can receive all necessary help in exchange for equity or some ownership and control of your company.
Crowdfunding: If you cannot find the right and relevant investors for funding your business that you are desperately looking for then crowdfunding can be a viable option even if you do not qualify for a business accelerator program. To use this option and approach you will have to post your business plan and idea online. You will get potential enthusiasts and customers who will offer help and donate to launch your company. However, there is no guarantee that you will always get the money you require.
Personal loans: Taking out a personal loan can also help you find your business provided you use the money received wisely. This is a smart financing option for startups and is easy to avail as personal loans are given on the basis of your personal credit and the amount of income you have and not on your business age and plans. You may borrow up to $100,000 as a personal loan and will have a time of seven years to pay it back to the lender.
You may also win grants to finance your startup business. These grants are offered by the state, nonprofit organizations, and even by private companies. Unlike traditional loans, grants usually need not be repaid. There are different types of grants for entrepreneurs but these may not be easy to avail. There are specific requirements for your eligibility and there are other strict rules and restrictions applicable.
Primarily, if you want to avail of a business grant then apart from the regular eligibility requirements, it is also needed that your business is in a financial position to pay upfront for the required and approved training or services in full. If you are successful in this process you will then you will be reimbursed only when you submit proof of purchase and supplier invoices.
Applying for such grants is also not easy as it will require a lot of documentation. Apart from that the reviewers follow a strict assessment process and will consider your eligibility but more so the extent to which the services support development and your skills, potential improvements likelihood of job growth, and value for money.
It is only when you pass this assessment process and complete your project you will be reimbursed half of the total cost of the project subject to the permitted grant funding amount. For this, you will need to submit an acquittal report and issue a valid tax invoice to the Department of Employment.
After all this knowledge you may now feel that funding your business is not as tough as you thought in the beginning as an entrepreneur.