The hardest part about a startup is figuring out how to get funding for a business idea. Funding an entrepreneurial endeavor can sometimes require more money than you have lying around. You’ll need a website, a tech team, and office space, and of course, enough cash to make ends meet until you see profits from your idea.
How to Get Funding for a Business Idea
Whether you have a great idea for a new cell phone application or you want to start a brick-and-mortar shop, most businesses require a little bit of outside funding to really get off the ground.
When it comes to looking for financing, there are two different types of financing. There is debt-based financing and zero-debt financing. Debt-based financing is exactly what you think of, and it is probably the most typical way of funding a new business. Debt-based funding is when a company receives an amount of money with the promise of repaying that money plus interest in a set amount of time. For debt-based loans, lenders can require several years’ worth of financial history before they agreed to lend a business money.
Unfortunately, new ideas don’t normally have years of financial history to appease lenders, so zero-debt financing is another route to take. Other than appealing to lenders, startup companies can look towards family and friends, the general public, their own assets, or individual investors to raise money for their idea.
It is not impossible to get a traditional loan when it comes to a new business idea. Still, conventional loans will look much different for a startup company than an established company. An alternative to the traditional route of securing a loan, people looking for funding can try crowdfunding, appealing to family and friends, or appealing to investors to raise the capital to start a business.