How to Get Funding for a Business: CEO Goals 411

I spent most of my professional career of over four decades raising money for companies, so I know a few things about how to get funding for a business at various stages in a business’s life cycle.

The Small Business Association (SBA) says that these are the steps to get funding for your business:

1. Decide How Much Money You Need

If you are a new business, this amount will be your startup expenses plus the money you will need until one of three things happens:

1) You become a cash-positive business,

2) You raise another round of financing, or;

3) You go bankrupt.

To do this properly, you will need to prepare a business plan and a budget.

2. Use Your Money or Personal Credit Capacity

Of the 33 companies I helped finance over a few decades, I used my own money for the startup expenses of 27 of them.

Find referrals to a qualified lending source.

If that works, you will get going more easily to build your company faster and not waste time explaining your great idea to people who have no idea what you are talking about.

3. Get Venture Capital

There are over 1,000 venture capital firms in the United States. Here are the Top 5 on the list of the Top 100 Venture Capital Firms.

Accel
Andreessen Horowitz
Benchmark
Index Ventures
Sequoia Capital

If you decide to go this route, it is your job to read the list and find one that will talk to you and support your company.

4. Crowdfund Your Business

Crowdfunding is a terrific way to fund a startup that intends to make a physical product. The funding you get from supporters is rewarded by giving them some of the product from the first production run.

If you have trouble raising financing for your company this way, re-think your product launch because it may not be exciting enough to others, or your presentation of the idea might be poor.

5. Get a Small Business Loan

The SBA supports loans with SBA guarantees. These guarantees go to business owners with excellent credit, a strong, profitable company, and significant collateral.

The SBA gives a partial guarantee for the loan, making the loan less risky to lenders.

The SBA has a Lender Match system to help a business owner find a lender that makes SBA-guaranteed loans.

6. Learn About SBA Investment Programs

The SBA funding programs go through a privately-owned company called a small business investment company (SBIC). SBICs are licensed and regulated by the SBA.

If the company you want to start meets the SBA definition of small, consider working with one of the over 60 Small Business Administration development centers across America.

A “small” business depends on the industry sector. It is usually a company with fewer than 1,5000 employees that makes less than $38.5 million in annual gross income.

If your style is a tiny micro-business with just one employee and that employee is you, try KIVA for a business loan of around $5,000. KIVA is a peer-to-peer lending system and does not require any collateral or credit history, just that you are a qualified applicant in a state where KIVA is authorized to give loans.

If you need $5,000 to $500,000, then you will likely have to guarantee the loan personally, so it is, in effect, a personal loan. You may have to pledge collateral to get this loan, like borrowing on the equity value in your house.
If you need $500,000 to $10 million, you can crowdsource this amount for a real estate project or hunt for private investors using a private placement offering.
If your business needs $10 million, $25 million, up to $100 million or more, consider venture capital at that level.

Higher amounts come from taking the company public through an initial public offering (IPO), a direct offering, or a merger with a special purpose acquisition company (SPAC).

40 Ways to Fund Your Company

Here is a list of 40 sources of capital that you need to know about to even think about money properly. I will briefly explain what they are. It is your job to think about them. Your analysis of the items on this list will help spark some ideas about finding the money for your business.

Make a list of the advantages and disadvantages of each item on this list. Then ask yourself if any of this money is available to you or is obtainable by making an intense effort on your part.

Microloans – Try KIVA and Accion to see if they are lending in your area.
Gig Economy – Get a second gig going as a freelancer.
Friends and Family – These are both the easiest and hardest investors to deal with for funding.
Credit Cards – If your business has more than 30% net profit after covering the cost of goods sold, then you will not mind paying 25% on the credit card interest rate to get going.
Personal Loan – There are so many potential lenders. Use a referral system to get an idea of some offering deals that might fit your circumstances.
HELOC – A HELOC is a home equity line of credit. If you have sufficient equity in your home, you may be able to borrow against it.
Cash Value of Life Insurance – If you have a whole life insurance policy that has cash value, you may borrow against it.
401 (k) – You may take an early withdrawal from your 401 (k) retirement funds if you are willing to pay any penalties and taxes due. Be extremely careful as you may lose your retirement funds and end up being a penniless, homeless person in old age if you screw up.
IRA – IRA funds might seem useful for your business, but this method has the same problems (penalties and taxes) as taking money from your 401 (k).
Garage Sale –If you only need a small amount to get started, sell the junk you no longer use through the online version of a garage sale by listing the items on eBay or selling them on Craigslist.
Growing Things – If you have a backyard, buy some seeds and grow some things to sell.
Online Sales Through Etsy – Sell the things you grew in your backyard (like strawberry jam) on Etsy.
Advance on Inheritance – Grandma may like the idea of being able to see your success using your inheritance from her before she dies.
Angel Investors – Try the AngelList.
Crowdfunding – Kickstarter and IndieGoGo are great for product companies. Crowdfunding may also work for some real estate development or acquisition deals.
Social Media Influence – GoFundMe is an example of how to use social media to raise money.
Private Placement – A private placement is an investment method that raises money from private investors who are accredited (sophisticated investors with strong net worth).
Venture Funds – Try the companies that are members of the National Venture Capital Association.
Bank Loan – Bank loans are usually only possible if you have at least three times the collateral requirements.
Insurance Deals – Insurance companies may guarantee a deal (for a fee) to make it seem less risky to investors.

SBA Loans – The SBA does not make loans. The SBA only guarantees a portion of the loans that private lenders make.
Factoring Receivables – Factoring is borrowing against receivables that exist for sales already made but when the invoiced amounts are not yet collected.
Advance From Suppliers – You may find it easier to borrow products to sell from vendors who are your suppliers rather than asking for cash.
Government Funding – The U.S. government has so many programs. For example, get ready for the new stimulus impacts of government infrastructure programs in your area.
Grants – Try the U.S. government grants.
Purchase Order Financing – Sell something to a substantial company and use the creditworthiness of that company as purchase order collateral to borrow on the purchase order to make the product to fulfill the order.
Partnerships – Create a partnership with anyone with money, expertise, and experience to help your business.
Sponsors – Put sponsors’ names (for a payment) on everything.
Selling Units of an LLC – A limited liability company (LLC) has unitholders, not shareholders. This legal structure is frequently the choice used to sell proportional pieces of a real estate development project.
Rental Income – Rent out all or part of your apartment/condo/home on Airbnb.
Contests – Yes, there are many venture-funding contests you can enter.
Pre-Sales – Sell something before you make it, then use the money collected to make it.
Liquidation – Liquidation is buying a company’s unsold inventory at below the company’s cost to make it and then selling it at a steeply discounted price to a third party.
Entrepreneur Presentations – To raise the money for your company, you may need to make presentations in front of many groups, from a few individuals to a conference hall room full of people.
Shark Tank –Get on this vicious TV show to get publicity for your idea, NOT for investment.
Alternative Lenders – Many lenders are not banks, credit unions, or typical lending companies.
NGO – A non-governmental organization may provide funding support for your project if it has a significant, positive social impact.
REIT – A real estate investment trust is a company that finances, owns, or operates income-producing properties.
SPAC – A special purpose acquisition company (SPAC) raises money from the public stock market as a “blank-check” company then tries to find another company or companies in a specific category to acquire.
Win the Lotto – If you do this, try to beat the odds and avoid a subsequent disaster from suddenly having an extraordinary amount of money. It is not as easy as you might think. It is actually more fun to build a business.

Now, since there is not enough space to share everything I know in a short article; I will use the letters of G-E-T-M-O-N-E-Y to create a powerful mnemonic (memory trigger) to help you succeed in funding your business. These helpful suggestions work no matter what type of business you have or want to start.

"G" is for GET ORGANIZED

You will find it very difficult to explore how to get funding for a business if you don’t first get organized. Successful companies organize themselves to run well and produce profits. Using online tools to help organize your finances makes this process easier. I recommend the Goalry system. Get a Goalry Member Key to get started.

The Goalry system will help you with the following:

The Goalry Mall. Where Goals Happen.

Bill paying
Budgeting
Sources for emergency cash
Manage debt
Get insurance quotes
Sources for financing
Taxes
Building wealth
Real estate appraisals
Managing credit scores

Every successful business person manages all of the things on this list extremely well. Did you get your Goalry Member Key? If yes, great! If not, why not? It is easy to get started. Why are you procrastinating? I will show you how to do things today that will help you get money for your business tomorrow. But you can’t build your finances without having the proper tools.

Stay Up to Date with Your Financial Goals. Join Today!

GET MEMBER KEY

"E" is for EXCELLENCE

Excellence is the quality of being outstanding. When you are a dynamic leader and your company is outstanding, you stand out from the rest of the crowd. In every business sector, excellent examples are the best companies. If you and or your business are not excellent yet, identify who is and copy them, then take it to the next level to set a new standard of excellence.

Why be like the rest when you can be the best?

"T" is for TRAINING

Learning is a life-long process. Accumulating knowledge is only a part of the process. Applying that knowledge in useful ways comes from a process called training. A professional athlete constantly trains to perform at an excellent level.

If you want money for your business, learn where the money is and train yourself to get some. Do it once, and then do it again. Raising money for a business is a constant need if you are thriving and expanding.

It is the dedication to training that creates excellence.

"M" is for MENTOR

Nobody is born knowing everything. It is amazing that anyone survives infancy because all we know how to do is sleep, eat, cry when we want to eat more, and make a mess in our diapers. For most, except the unlucky ones, their mother is their first mentor and hopefully a good one. Would you know how to tie your shoes if not shown how to do it?

As an adult, we may falsely think that we know everything. Still, everyone can benefit from having a mentor. How do you get a mentor? Find someone you admire and tell them you want to help them with anything they want to do because you want to learn how to be like them.

If you want to learn how to get money for your business, choose someone who knows how to do this.

Choose wisely. If the person rejects your offer, you made a bad choice. You do not want to be like them. Your mentor will gladly want to help you.

Remember this, if a younger person later in your life asks you to be their mentor. Say yes when asked.

"O" is for OWNERSHIP

Ownership is more than just the possession of material things. Taking ownership also means accepting responsibility. Own your concepts, plans, and dreams. Do not blame others if something goes wrong.

Own your failures as well as your successes.

Learn from failure, make adjustments, and continue toward success with the knowledge gained from experience.

"N" is for NEW

To a baby, everything is new. For every person, each day alive is a new day. Make exploring something new a part of your life’s adventure. Do new things. Try new things. Do old things in a new way.

Don’t get stuck in a rut, be renewed by thinking anew about what you want to do.

I had one friend who tried and failed to raise capital for his company for about a year. He talked to banks, lenders, investors, venture capitalists, and everyone he could. He was ready to give up. I asked him, “What company would benefit financially from your success the most?”

He gave me the name of his major electronic component supplier, a huge multi-national company with tremendous resources. I told him to ask their venture department for the money. He did not know they had a venture arm. They gave him $12 million for his startup company, and he became one of their best customers!

"E" is for ENTHUSIASM

Please get rid of one phrase. I want you to agree not to say it and make a promise to yourself not to think about it because the phrase is fundamentally harmful. It will ruin your life if you say it and feel it. The phrase is, “I can’t.” This phrase is not beneficial. It even blocks the possibility of considering ways that something may be possible.

Instead, be enthusiastic about trying, and even if you do not start with “I can,” at least start with “I might be able to.”

The worst thing you can do is convince yourself to stop before you even try.

When a potential funder of one of my deals rejected the investment opportunity, I would always say the same thing, “I understand and appreciate your evaluation. What would you have to see in this deal to get to Yes?” Then, we considered ways that the deal could be improved and might be possible.

Maybe that deal was not a good fit, but I assure you the next deal I presented to the same funder would be a perfect fit if they honestly told me what they wanted and I could achieve it.

"Y" is for YOU

Business plans, contracts, deal structures, financials, market analyses, and a mountain of paperwork may be part of the process to get the money. However,

The fundamental reason people invest in or lend to a business is how they feel about you.

Work on becoming like the person you admire who is successful in business. If you do this, the amazing thing is that you will not worry about how to get money for your business because the money will find you.

Final Encouragement

Money for your business is everywhere. There are thousands of resources. If you need ideas and leads, simply Google the type of business along with the phrase GET MONEY.

For example, a search for “Plumbing Company GET MONEY” shows companies that specialize in financing plumbing companies.

And if you are clever, you already have your Goalry Member Key and noticed right at the beginning of this article that the Goalry system has sources for financing.

I promised you I would show you how to get money for a business if you are organized. So get organized and GET MONEY.

Build WealthWilliam VinsonNovember 5, 2021Comment