Ways to Get Funding for Your Business and Fuel Long-Term Growth

The Importance of Matching Funding to Your Growth Goals

Before asking for funding from a lender or seeking investors for your business, you need to decide how much money you need and how you plan to use the funds.

This is where a well-developed business plan can help. A strong business plan outlines your goals, forecasts revenue, lists expected expenses, and defines your growth strategy.

It can also help you evaluate the various ways to get funding for your business and determine which option fits your needs.

Common funding goals include:

• Covering startup costs

• Purchasing equipment and inventory

• Hiring employees

• Opening a new location or expanding into a new market

• Investing in marketing

• Technology upgrades

The best ways to get funding for your business often depend on the stage of your business, its revenue, industry, and your growth objectives.

How to Raise Capital for Business

Below are some of the most common ways to get funding for your business at different stages of growth.

1. Self-Funding and Bootstrapping

Many entrepreneurs begin their business journey through self-funding, or bootstrapping. This involves using personal funds or resources to launch or grow a business instead of relying on lenders or investors.

Bootstrapping can come from your:

• Savings accounts or other personal funds

• Retirement funds

• Home equity

Many successful companies began as bootstrapped businesses because it allows you to maintain complete control over decisions and ownership of your company. You also don’t have to worry about monthly loan payments or investors expecting returns.

Self-funding does, however, carry a potential personal financial risk. If your business goes under, you could lose any personal savings or investments you’ve put into the business.

Still, bootstrapping is one of the most accessible ways to get funding for your business if you have modest startup costs and more conservative growth plans.

2. Venture Capital and Equity Financing

With equity funding, you receive funding from investors or venture capitalists in exchange for equity, or ownership shares.

Venture capital firms typically invest in businesses that demonstrate strong growth potential. These investors focus less on current profitability and more on future market opportunities.

Venture capital funding can help your business:

• Scale operations quickly

• Hire specialized talent earlier

• Expand into new markets

• Accelerate product development

• Increase market share

The downside is that, in addition to losing a portion of your ownership, you can lose some control over strategic decisions. Even so, venture capital is one of the most powerful ways to get funding for your business when you want to grow your business rapidly.

3. Angel Investors and Seed Funding

Some startups look to angel investors for initial seed funding. Angel investors are often high-net-worth individuals who use their own personal funds to invest in promising early-stage companies in exchange for convertible debt or equity.

Angel investing is one of the most valuable ways to get funding for your business when you can benefit from both capital and mentorship.

Angel investments fund product development, early hires, and marketing. They’re an important bridge between self-funding and bringing institutional investors on board.

4. Crowdfunding

Most people are familiar with the popular crowdfunding platform Kickstarter. Crowdfunding platforms were created for startups learning how to fund a business, particularly when launching new products.

With crowdfunding, you raise money from multiple people who contribute individually. The contributions are typically smaller amounts than you'll receive from a lender or investor.

A successful campaign can provide evidence that there's a true market demand for your product or service.

A prime advantage is that you don’t have to give up equity in your business, unless you use an equity-based crowdfunding platform like Fundable.

Crowdfunding provides an alternative solution to traditional lending while also helping to build brand awareness and customer engagement. As a result, crowdfunding has become one of the most popular ways to get funding for your business while simultaneously building a customer community.

5. Government Small Business Grants

You may not have considered a government grant for your business until now. But if you’re looking for ways to get funding for your business, maybe you should.

Government grants are available at the federal, state, and local levels. These programs are some of the most affordable ways to get funding for your business because repayment isn’t usually required.

Be forewarned, however, that the application process can be quite competitive. But if you win a grant, you’ll receive startup funding without having to give up ownership of your business.

You can search for federal grants on the Grants.gov website. Some grants target specific industries, geographic areas, or business demographics, while others support innovation and technology development.

Government grants can be one of the most cost-effective ways to finance a business. But for a chance at a grant, you’ll need adequate preparation and documentation.

6. SBIR and STTR Programs

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs were created for technology or research-focused businesses.

The SBIR program supports innovation for startups and companies developing new technologies, products, or solutions. The STTR program, meanwhile, prioritizes partnerships between small businesses and research institutions such as universities.

Both the SBIR and STTR programs can provide:

• Research funding

• Product development support

• Technical assistance

• Opportunities to attract future investors

For technology startups, these programs are among the most attractive ways to get funding for your business without sacrificing equity.

They can also provide valuable expertise and resources during the product development stage of your business, especially if your business is in the healthcare, science, engineering, or advanced technology field.

7. Procurement Funding and Contract Financing

Many businesses, such as those in the manufacturing and construction industries, operate by winning contracts. But fulfilling those contracts can create financial challenges for your business. After all, you’ll need to purchase inventory or equipment, hire workers, or increase production before receiving payment from your customers.

Procurement funding can help you bridge that gap. This type of financing can provide the working capital needed to fulfill purchase orders and large contracts.

Procurement financing is also useful for companies that work with:

• Government agencies

• Educational institutions

• Healthcare organizations

For contract-based companies, procurement financing is one of the most practical ways to get funding for your business without giving up ownership. Procurement financing can help your business accept larger contracts and increase production without disrupting cash flow.

8. Small Business Loans

Small business loans are still one of the most common and useful ways to get funding for your business. These loans are underwritten by banks, credit unions, approved SBA lenders, or alternative lenders.

Types of small business loans include:

• SBA loans: SBA loans are offered through the U.S. Small Business Administration. They offer the best repayment terms and lower interest rates. However, the time to funding can take weeks or even months.

• Business lines of credit: Some businesses only need to borrow a modest loan sum now and then or have more flexibility in how they can use the funds. A business line of credit is the perfect solution to this end.

• Equipment loans: Equipment financing can help you get the equipment needed for your business. These loans are usually easier to qualify for because the equipment you purchase with the loan becomes collateral.

Other small business financing solutions include commercial real estate loans, working capital loans, and revenue-based financing.

A significant advantage of small business financing is that you retain full ownership of your company while getting the funds you need to grow your business. 

Most small business loans offer predictable repayment schedules. But the exact loan terms will vary by lender, your creditworthiness, the type of financing, and the stage and financial health of your business.

How to Choose Which Ways to Get Funding for Your Business

Choosing the right funding solution with so many ways to get funding for your business can feel overwhelming.

The best solution will fit your financial position, business goals, and stage of business. Exploring the different ways to get funding for your business can help you build a financing strategy that supports long-term growth.

Evaluate your specific funding needs. Self-funding, seed funding, angel investors, or crowdfunding might be the best place to start if you're launching a startup.

But if you're looking to expand your business rapidly, venture capitalist funding might be worth pursuing. If you need short-term working capital, a line of credit may be more appropriate.

It’s also vital to consider how important it is for you to stay in full control of your business. A small business loan allows you to retain control of your company. Equity funding, however, requires sharing ownership with investors.

Many businesses use different funding sources as they grow, moving from self-funding to loans, investors, or procurement financing as needs evolve.

Understanding how to raise capital for business growth is about creating a financial strategy that supports your business success for years to come.