Navigating the Business Funding Landscape
There’s a question I get asked a lot: “Mini, I’m ready to pursue a new business venture, but where do I even begin with funding?” It’s a question that gets right to the heart of the matter. Passion and a great idea are important, but every business needs capital to get off the ground. For many aspiring entrepreneurs, knowing how to find money to start a business feels like the hardest part of the journey.
The good news is, there are a lot more options available than you might think. At Benetrends, we’ve been helping business owners find the right funding solutions for over 40 years, and I’m here to tell you there’s no single, one-size-fits-all approach. The “best” path depends on your unique situation, but there is a way forward for everyone. So let’s explore some of the most common pathways to getting your venture funded.
Personal Savings and Bootstrapping
When most people are ready to start exploring funding, their personal finances are often the first place they look. Many entrepreneurs start by using personal savings to bootstrap their business because it gives them full control and avoids debt. This can be a high-risk approach, as it puts your personal assets directly on the line. So, this is often best suited for businesses with low startup costs, or for entrepreneurs who have a substantial amount saved up and are comfortable with the risk.
Another form of personal funding is tapping into your existing assets, like home equity. A Home Equity Line of Credit (HELOC) can provide a source of capital by allowing you to borrow against the value of your home. This can offer a lower interest rate than other types of loans, but it does mean your home is used as collateral. Although using personal resources can give you a lot of flexibility and autonomy, it’s crucial to understand the risks involved before you commit your own money.
Business Loans and Financial Institutions
For many business owners, a loan is a natural next step. Traditional startup loans from banks or other financial institutions are still a go-to option that can provide a significant amount of capital. The reality is that banks want to lend money because that’s how they make money. What they’re looking for is confidence in your ability to demonstrate that you’re a good investment. This means having a strong business plan, a solid credit history, and sometimes, collateral to back the loan. Being prepared with these documents can greatly improve your chances of approval.
SBA loans are a great choice for small businesses, and they’re particularly useful for funding franchises, start-ups, and business expansions. This is a great funding option if you’re looking for a loan with favorable terms to get your business off the ground. But keep in mind that all owners with a significant stake in the business are required to personally guarantee the loan.
Here at Benetrends, we’ve been helping clients secure financing since 1983 and have one of the highest approval rates in the industry, so you can approach your application with confidence. We also have a large network of preferred lenders, making it easier than ever to secure the financing your business needs.
Alternative Funding: Investors and Grants
Beyond traditional loans, there’s a whole world of funding available through investors and grants. Investors can come in many forms, from friends and family who believe in your vision to more formal arrangements with venture capitalists or angel investors. Friends and family are often the easiest to approach, but mixing business with personal relationships can be tricky. Angel investors are typically wealthy individuals who provide capital for a startup in exchange for ownership equity. Venture capital firms, on the other hand, usually invest larger sums into companies with significant growth potential.
For those who want to avoid giving up equity or taking on debt, grants are an excellent option. These are typically provided by government agencies or private organizations and don’t need to be repaid. However, grants are often very specific in their eligibility requirements and application process, and they can be highly competitive. They offer a unique way to fund a business, but the process requires thorough research and persistence.
For the Everyday Worker: How to Find Money to Start a Business
This is where I get really excited: “How can someone with a standard normal 9-to-5 job, without a big inheritance or a rich uncle, possibly get the money to start a business?” The truth is, many people don’t realize they may already have the funds they need. Their retirement savings, like a 401(k) or IRA, may be the answer. For those who have been working for a while and have built up retirement savings, this is a powerful and often overlooked option.
This brings me to one of our most popular funding solutions: the Rollovers-as-Business-Startups (ROBS) Plan. This path allows you to use your existing retirement funds to fund your business while taking advantage of tax-deferred and penalty-free benefits. And while you could use ROBS for any business, a particularly effective strategy is to apply it to a proven business model like franchising. A franchise offers a blueprint for how a business should operate, which can make it a more attractive and less risky investment for your retirement capital.
Putting It All Together
Navigating the world of business funding can seem overwhelming, but it doesn’t have to be. Whether it’s personal savings, traditional loans, investors, grants, or something innovative like our ROBS solution, there’s likely a path that makes sense for your specific situation. The key is understanding what’s available and finding the right fit. And the best part? You don’t have to figure it out alone. We’ve walked thousands of people through this exact process, specializing in helping entrepreneurs find a funding solution that makes sense for their unique business. Remember, you don’t need to have it all figured out on your own. What you do need is a clear strategy, guidance, and the right mindset.
I could keep talking about funding options all day, but what really matters is finding the right one for you. That’s where we come in. Fill out our simple contact form here to schedule a conversation with me. We’ll talk through your goals, look at funding options that make sense for your unique situation, and help you find the right path for your vision.