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Finding Funding

Finding Funding

Wherever you are in your business journey, funding remains a constant need. If your business is in a place where you are now ready to grow and need new or additional funding options, below are some things you need to consider. 

Evaluate Your Funding Needs

Before you even begin your search, it’s critical that you identify the reason(s) that you are seeking funding in the first place and to determine how the money will be spent. With a clear reason in mind and spending plan, you’re far more likely to be successful in securing funding.

 

Below are a few common reasons why business owners may seek funding after the start-up phase:

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Equipment

As business volume increases, maybe you need more equipment to accommodate the increase in business. This could mean you need more cash registers, computers, forklifts, or other tools to ensure your staff is successful in their roles. 

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Paying off Business Debt

No one likes debt, but being in business may require it to achieve financial stability. If you are thinking of using external funding to settle debts, be sure to consult with your financial team to figure out the best route for your personal business situation. 

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Emergency

Emergencies happen. Sometimes, regardless of how prepared you are, you will need to seek out additional funding. 

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Hiring New Employees

As you grow, extra capital may be required to hire new talent in your organization. 

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Business Finances Snapshot

Now that you have determined a reason for seeking funding, it’s time to take a moment to examine your current financial situation.

  1. Credit
  2. Personal and Business Credit: Before requesting more funding, assess both your personal or business credit with the three major credit rating agencies. You can usually request this information for free through Equifax, Experian or TransUnion once per year.
  3. Assets
  4. Liquid Assets: Take stock of your available assets that you can use to invest in your business. It would be wise to meet with your accountant or financial planner to gain the most accurate assessment of your financial situation.
  5. Collateral
  6. Take stock of any collateral you may have, such as your car, property, and checking and savings accounts. Many times, lenders request collateral to ensure that you’re a serious borrower and can pay back the loan. Again, consult with your accountant or financial advisor for the most accurate advice for your financial situation.
  7. Debt
  8. Personal and Business Debt: Assess any personal or business debt you may have. This includes student loans, mortgages, car loans, etc.
  9. Expense sheet
  10. Business Expenses: Take into account your running business expenses, such as rent, utilities, monthly subscriptions, employee payroll, healthcare, etc.
  11. Business Valuation
  12. What is it?
  13. Business valuation in the simplest of terms is a process to determine the economic value of your business. This process, regardless of the size of your business, usually involves a full and objective assessment of every piece of your business.
  14. This includes: equipment, inventory, property, liquid assets, and anything else of economic value that your business owns. Your management structure, number of employees, revenue, and projected revenue may come into play as well.
  15. Do you need to do one?
  16. Depending on the situation, you may consider a business valuation. Some investors may want to see one before even considering giving your business money.
  17. Be sure to consult your financial team before beginning a business valuation.

Funding Sources

There are many routes you as a business owner can take when seeking financing. Depending on your needs and situation, it might be easiest to borrow from friends and family or to simply apply for an additional line of credit. Read through the sections below to learn more about some of the common funding routes for businesses and see what is the best fit for your business. For more information, check out the Funding Your Business page in the starting section.

Learn More

Online Lenders

Online lenders continue to grow in popularity. They take the form of private companies (i.e., Square and PayPal) that lend as part of a larger business offering or as entities wholly designed for online lending. Most financial institutions, including traditional banks, SBA-backed lenders, CDFIs, and others now offer online options with faster and more convenient application processes. BE CAREFUL. Many online lenders offer riskier terms, like higher interest rates or high penalties and fees. Make sure to educate yourself on the repayment terms before taking any online loans.

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Common Pitfalls 

Payday Loans

Payday loans are short-term loans that give borrowers access to fast cash at a flat rate, generally for $500 or less. While they may seem appealing, it’s important to read the fine print. Payday loans are often pricey for borrowers and must be paid back on the date of your next paycheck. While many state laws set a maximum amount for payday loan fees, they can vary between $10-$30 for every $100 borrowed. They also usually have extremely high annual percentage rates (APR), with an average interest rate of almost 400%, and can trap you in a cycle of debt that’s impossible to stop.

Borrowing Too Much

One of the biggest mistakes a business owner can make as they try to secure additional funding is to take on more debt than they can handle. Taking on too much debt can cause challenges down the road, impacting the ability to save money for the future, or even continue paying other expenses. It is important that you have an honest understanding of your financial situation before taking on any new debt.


Regardless of how long you’ve been in business, at some point or another, you are likely to need additional funding. Be sure to take the necessary steps to secure the type of funding that is best for you. As always, when making financial decisions or changes in your business, be sure to consult with your financial team before making any important decisions.

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