This blog is part 2 of our previous blog, The Entrepreneur’s Guide to Business Loan Interest Rates.

Small businesses are the backbone of the American economy. However, running a small business can be challenging, especially when it comes to financing. 

While small business loans can be a valuable option, they are not always the best fit for every business. This is especially true nowadays, with the typical loan’s interest rate clocking in at 5.26% to 11.32%. 

Fortunately, there are a variety of alternative funding opportunities available. Below, we lay out some ways to receive funding for small businesses!

1. Grants

Grants are a type of funding that does not require repayment, and can be federal, state-wide, or even local. They are available to small businesses that meet certain criteria and typically have specific purposes, such as research and development or help for disadvantaged groups as well.

Researching and applying for grants is time-consuming. However, the benefits can extend far beyond financial support, like credibility and industry recognition.

2. Crowdfunding

Crowdfunding is a popular way for small businesses to obtain funding quickly. It’s also a great way to build a community of supporters, rather than just one or two major investors. Platforms for crowdfunding, such as WeFunder or Kickstarter, allow businesses to raise funds by asking the public to invest in their services.

Additionally, crowdfunding does not need repayment like loans do. However, there is no guarantee of success; meaning there is a chance that the desired funding amount may not be reached.

Typically, crowdfunding platform fees are at least 5%.

3. Invoice Financing

Small businesses that offer goods or services can use invoice financing. This funding method involves selling unpaid customer invoices to a third-party financing company at a discount. 

Businesses receive immediate funds, and the third-party company then recoups the money owed when the invoice is paid. Invoice financing can be an easy way to acquire funds, and it’s also ideal for those needing short-term solutions.

It’s also worth noting that this option could create a buildup of excessive fees. To avoid financial trouble, consult an accounting expert first.

4. Angel Investors

Angel investors are entrepreneurs that offer startup companies funding in exchange for equity or a share of the company. They can also provide funds and offer strategic guidance and industry connections. 

When seeking angel investment, small businesses must provide a business plan detailing how they intend to use the funds to grow their business.

Here are some resources:

5. Business Incubators

Business incubators are unique support programs designed to help small businesses grow their operations. They provide a range of resources, tools, and support services, including office space, mentorship, and education.

Many business incubators also offer funding opportunities, such as loans, grants, and venture capital. By working with a business incubator, small businesses can receive financial support as well as guidance needed to succeed.

Here is a list of incubators in the Grand Rapids area:

6. Sponsorships

Small businesses can also leverage sponsorships to gain crucial funds for growth and development. By partnering with like-minded organizations or influential individuals, small businesses can reach a larger audience.

These sponsorships often come in the form of financial support, in-kind contributions, or promotional opportunities. 

By establishing mutually beneficial relationships, small businesses can secure the funds they need. They can also enhance their brand visibility and creating lasting partnerships within their community or industry.

7. Get Help From a Financial Expert

Funding for small businesses is a great way for them overcome financial hurdles and achieve their goals. While obtaining funds can be challenging, the rewards from both success and stability cannot be underestimated.

That’s why hiring a financial expert may be your saving grace. HAS has a team of advisors that will walk you through various options and help you make the best choice for your business.

We’ll navigate you through the process, provide resources, and help answer all your questions!

Contact HAS for Business and Financial Guidance

Starting a small business is a big step—and we’re here to help! Heintzelman Accounting Services (HAS) is happy to assist funding for small businesses, resources, strategy, and more.

We will work to understand your needs and come up with solutions that best fit your business. Contact us to learn more!