How to Get Business Funding for a New Business in 4 Steps

Starting a business is an exciting adventure! After months of research, hard work, and preparation – you’re just steps away from turning your dream into reality. One of the most important decisions you will make as a new business owner is how to get funding for your venture.

It can be overwhelming to think about having enough funding to get started, but there are funding options available for new businesses! With the right strategies and know-how, finding a source of funding for your new business doesn't have to be intimidating or time-consuming. In this guide, we'll offer helpful tips on how to secure funding for new businesses. So let's dive into the steps to take to get funding for your new business!

Step #1: Calculate How Much Funding You Need for Your New Business

Before you start searching for funding options for your new business, make sure you have your numbers dialed in. Start with understanding what you are seeking funding for. Are you trying to...

• Purchase inventory
• Jump-start your marketing
• Smooth out your cash flow during your off-season

Whatever the reason may be, understanding how much funding your new business needs to get up and running successfully and what you plan to use it for will help you save time when considering your funding options.

When thinking about how much funding you need for your business, there are a few other things to consider:

• What are the repayment terms? Are there prepayment penalties?
• How much will you be able to afford for repayment? 
• What are the repayment plans, daily, weekly, or monthly?
• Are you looking for short-term funding for one-off expenses or long-term funding for bigger purchases?

Asking yourself these questions will help you to better understand the financial commitment you are taking on and help you avoid taking on funding that is not sustainable for your business to repay.

Fundid Recommendation: If you aren't sure where to get started, download our Business Budget Tracker to help you track your business's income and expenses. Listing out the income and expenses of your new business can help you get a clear picture of your business's financial health and where additional funding can support you best.

Step #2: Research Potential Funding Sources

Once you have an estimation of the amount of funding you're looking to obtain for your new business, you can start researching potential funding options and lenders. As a new business, you may find that obtaining funding can be difficult as many lenders will be looking for at least a year's time in business, revenue, and established credit, but that doesn't mean there aren't funding options out there for your new business!

If you aren't sure where to get started, your local Small Business Administration (SBA) office can be a helpful resource. The SBA provides counseling, capital, and contracting expertise for small businesses.

Step #3: Apply for Funding For your New Business

Once you have done your research on funding sources for your new business, you can start submitting your applications. It is important to note that if these lenders are doing a personal credit check, you might not want to apply for them all at once. Submitting multiple applications to lenders who do a personal credit pull can impact your credit score negatively.

Step #4: Secure Funding and Start Growing Your Business

Once you've been approved and secured your funding, it's time to put those funds to good use by growing and expanding your business! As you move forward with your plans, it's essential to update your financial records to accurately represent the funding you have received and your repayment commitments. By maintaining a clear and organized financial status, you are positioning your business for ongoing success and potential access to further funding opportunities in the future.

Related Reading: 5 Financial Accounts to Help Manage Your Business Finances

Funding Options for New Businesses

When seeking funding for your new business, there are a few non-traditional options that business owners consider, like asking friends and family or crowdfunding, but let's take a look at some more traditional options out there for new businesses to consider.

#1. Business Grants

Business grants are becoming an increasingly popular funding option for new businesses. Many business grants are open to new businesses and don't have as strict requirements are other funding options. Since they don't have to be repaid, business grants can give new businesses the funding they need to start their growth journey.

Fundid Recommendation: Ready to start searching for business grants? Join our bi-weekly newsletter, Grants for Growth! The Grants for Growth newsletter is delivered to your inbox every other Wednesday and includes new business grants, grants that are closing soon, and tips to grow your business. 

#2. Equipment Financing

If you are in need to equipment to get your new business up and running, this is a great funding option to consider. Since the equipment in the loan is your collateral, these loans may be easier for a new business owner to obtain compared to a standard business loan.

Related Reading: What is a Business Equipment Loan?