The pandemic fueled a record number of new businesses over the last 21 months. More than 440,000 businesses launched in June 2021 alone.

Starting a business has never been more accessible or easier. There are books that show you how to create a startup for very little money.

While the costs to start a business are lower than ever, you still have to fund your business. The reality is that you could fund a business for a few hundred dollars, but it’s really a side gig or hobby.

A startup business means that you have costs to launch and operate the business as you build momentum. You won’t have to keep your full-time job, so you can focus only on the startup business.

What are your business funding options? Keep reading to learn how to fund a startup business.

1. Family and Friends

Family and friends are one of the best sources of support. It’s not as simple as saying you’re starting a business and you need financial help.

Give them a reason to help you. Show that you’re serious about the business.

Create a funding goal and a deadline. If your business is based on a product, show them a prototype. If it’s an idea, show them a business plan.

If this is a gift, make that clear with a contract. If it’s a loan, definitely get it in writing.

Great relationships get ruined because people misunderstand the terms of the loan.

2. Your Own Money

Do you have to use your own money to fund your business? You could, but what else could those funds be used for?

Taking money out of your retirement savings isn’t a smart business move. There are other ways to get small business capital without sacrificing your future.

However, if you have rainy-day savings for short-term emergencies, you could do that. You have to make sure you have enough set aside to fund all aspects of the business and pay yourself.

It’s essential to have an accurate picture of your personal and business financials. Any missteps will cause a lot of stress and you’ll make bad business decisions.

3. Credit Cards

Credit cards are a business funding option, but one you’ll pay the most for. That’s because credit card interest can be as high as 29%.

They’re an easy solution because you don’t have to jump through so many hoops to fund your business. They will take many years to pay off.

4. Small Business Grants

A grant is a funding option that usually doesn’t have to be repaid. These are given out by industry and small business associations.

There’s a reason why these organizations give out money. Some want to stimulate the economy, others want to make it easier for people in certain demographics to start a business.

Don’t get lost in the free-money aspect of grants. There are strict uses for the funds and you have to qualify for them. They’re highly competitive as well.

5. Business Loans

Business loans are one of the top ways to fund a small business. It’s a very clean transaction. You borrow money and pay it back according to the terms of the loan.

You can go through the Small Business Administration or your local bank for a business loan. These lenders look for collateral to secure the loan over a certain amount.

More options popped up in recent years, including fintech companies and peer-to-peer lenders.

Fintech lenders are online institutions. They use the latest technology to determine your eligibility and fund the loan in a short period of time.

Peer-to-peer lending works with individual lenders and investors. They connect them with funding opportunities, such as startup companies.

Carefully research these options, because you want a lender with a great reputation and excellent customer service.

Another way to fund your business is with payroll funding. This is an option if you start a staffing agency. This type of business works on a different business model than most small businesses.

Most small businesses can invoice customers and get paid in advance. Staffing agencies don’t get paid for months after they deliver services.

This creates cash flow issues that payroll funding can solve.

6. Business Investors

An angel investor is a person or small group of people with the means to give you small business capital. They do expect a return on investment, but they also know that it takes time.

You’ll have to negotiate how much control they have over your business in exchange for the business funding.

7. Pitch Competitions

Local and national business incubators have pitch contests. Startup founders present their business idea to a panel.

The panel decides which one is the best. The winner receives startup funding.

It seems very simple, but these are pressure-filled situations because they’re public events. You also have a limited amount of time to pitch your business.

You might have as little as five minutes to sell your business concept.

A good pitch should include the creative vision of the business, the problem your business solves, and the market opportunity.

Include your business model and how you’ll become a profitable business.

That’s a lot to talk about in just a few minutes. Master this skill, and you’ll make a lot of money for your startup.

Smart Ways to Fund Your Business

There isn’t a right or wrong way to start and fund a business. Some choose to bootstrap their way, working a full-time job while starting the business as a side gig.

Others decide to jump right in and make the startup their full-time job. If this is the path for you, you do need to fund your business.

The tips in this article showed you business funding options that range from funding the business yourself to pitch competitions.

Use a combination of options for a fully-funded startup business. Head over to the home page of this site for more entrepreneurial tips today!