5 Best Funding Options for New Businesses
Explore funding options to support your business growth.
Are you ready to start your own business but don't know how to get the funding necessary for it to become a reality? The good news is that even if you lack business revenue, there are still ways to get the capital you need to get your business off the ground.
In this guide, we'll discuss how to get business funding even when your business isn't generating revenue yet. Read on for tips and ideas about getting the funds you need without having preexisting revenue.
Consider How Much Funding You Need for Your New Business
The first step you'll want to take before seeking funding for your new business is to understand how much funding you'll be looking for and what the use of it is for. Are you looking to purchase new equipment for your business? Or are you looking for a line of credit for your recurring expenses? How much can you afford monthly for repayment?
Asking yourself these questions before searching for funding for your new business will help you better compare the types of funding you want to secure. Taking the time now to evaluate your financial requirements will help you avoid financial strain down the road and set a strong financial foundation for your business growth.
Related Reading: 11 Types of Business Loans for Small Business Owners
Types of Funding for a New Business
It's true... obtaining funding for a new business can be challenging. Many lenders are looking for businesses that are incorporated, generating revenue, and commonly at least a year in business.
However, there are funding options available to help get your business up and running. We know that most business owners who are just starting out are typically using their personal funds to support the growth of their business; eventually, the time will come when you will want to start separating your personal and business finances. Let's dive into a few different funding options for new businesses.
#1. The Paintbrush Loan
The Paintbrush Loan is the earliest and fastest startup funding available, with an application you can fill out in 10 minutes, no revenue requirements, no pitching, and now with same-day bank funding for $50,000.
Funds can be used to build an MVP, run marketing campaigns, validate ideas and conduct user research, add non-dilutive capital to a venture raise, fuel startup growth, launch a small business, or expand your side hustle.
Who is the funding best for?
The Paintbrush Loan is best for business owners that make at least $100,000 in annual revenue with a 720+ personal credit score that are looking for $50,000 in funding. At this time, the Paintbrush Loan is only for $50,000; you won't be able to get anything less or more. See if the Paintbrush Loan is right for your business.
#2. Startup Loans
A startup loan is a type of business loan that specifically helps entrepreneurs and small business owners get their ideas off the ground. Unlike traditional loans, startup loans are intended for businesses that aren't yet profitable and often have no credit history. These loans can be used to cover expenses like inventory, marketing, and equipment.
To qualify for a startup loan, you'll typically need to have a solid business plan, a good credit score, and some collateral to offer. Once approved, you'll receive a lump sum of money that you can use to fund your business. While startup loans can come with higher interest rates and shorter repayment terms than traditional loans, they can be an effective tool for launching your business and getting it off the ground.
Fundid Recommendation: We've partnered with Lendio, the nation’s leading small business loan marketplace. With a single, free application, business owners can gain access to over 75 financial institutions that offer a number of different financial services, including startup loans.
Who is this funding best for?
The Lendio startup loan is best for business owners with a 680+ personal credit score, at least $6,000 in monthly revenue, and 3+ months time in business. However, if your business doesn’t match any of the qualifiers listed, you may be able to receive funding from one of their other lending partners for a different loan type. With one application, you can see your options from their 75+ lenders. Explore your options today with Lendio.
#3. Business Grants
Business grants can be another solution to getting business funding as a new business, but they do require more of your time, and the application process is competitive. The best part about business grants is that they commonly don't have to be repaid - so they provide new businesses with the boost of funding they need to get going.
The Fundid Grant Marketplace is the best place for new business owners to search and find business grants. With new grants added weekly, you can always be on top of new funding options for your new business. Create your free Fundid account today to start searching for business grants!
Fundid Recommendation: Join our Grants for Growth biweekly newsletter to stay up to date on the latest grant finds. You'll never miss a new opportunity or a grant deadline when you subscribe to the Grants for Growth newsletter.
Related Reading: 3 Tips for Winning Business Grants
Microloans can provide an excellent funding solution for new businesses that are looking for a smaller amount of capital to kick-start their business. These are smaller loans, typically ranging from $500 to $50,000, designed to support small businesses and start-ups that might not qualify for traditional bank loans.
The ease of access, lower interest rates, and simpler repayment terms make microloans an attractive option for new businesses. Moreover, microlending institutions often offer added benefits like mentoring, networking opportunities, and financial literacy education.
As a new business owner, considering a microloan can be a practical and helpful step towards obtaining the necessary funding to get your venture off the ground and set the stage for sustained growth.
#4. Equipment Financing
An equipment loan can be a particularly helpful funding option for new businesses, as it enables business owners to acquire the required machinery or tools they need to get started without exhausting their funds on upfront costs.
Related Reading: Types of Equipment you can Finance for Your Business
The way equipment loans work is quite simple: lenders provide the entrepreneur with the finances needed to purchase the equipment, and in return, the borrower pays back the loan over time, along with interest. One key advantage of equipment loans is that they often use the equipment itself as collateral, meaning no additional burden on the business owner.
This financing option can establish a strong foundation for a new business by alleviating cash flow concerns, allowing small business owners to focus on expanding operations and building their business with confidence.
Fundid Recommendation: Lendio can also provide your business with equipment financing! Submit your one application for free with out impacting your credit to see the best loan options for your business.
Should I get Business Funding for my New Business?
Deciding whether to get business funding for your new business can be a challenging decision. To make an informed choice, it's essential to consider a few key factors.
First, evaluate your financial situation and determine how much you can afford for repayment. If debt repayment would strain your business, it may not be the best choice. Next, assess your eligibility for funding by researching various financing options, such as micro-loans or business grants, and their specific requirements. By taking these factors into account, you'll be well-equipped to make an educated decision about securing funding for your new business venture.
Explore Your Funding Options Through the Capital Marketplace
At Fundid, we are helping business owners connect to the tools and resources they need to grow and thrive. Through our Capital Marketplace, you can get connected to a variety of lenders and see what financing options will be best for your business. Get started today!
Fundid is redefining how small businesses understand and access capital.