Another successful year in business comes to a close. The cash flow remained steady and you marked off goal after goal — except one: that expansion you planned.
If you find yourself caught in a cycle of “maybe next year we can afford to,” when looking for opportunities for business growth, it’s time to consider business funding.
While keeping your business running is your primary goal, excess funds push you toward growth. Having the money in the bank allows your business to jump at new opportunities and invest in new services or locations.
Sadly money likely won’t fall from the sky, so it’s up to you to find growth funding for your business. We chatted with small business expert Chisolu Isiadinso to discover ways to lock in business funding for 2023.
Business Grants: Free Money for Your Business
Business grants are the holy grail of business funding. Because grants don’t need to be paid back, this is often the first stop for business owners. This means the competition will be fierce. But according to Isiadinso, it’s worth it.
“Even with me starting my first business and making $200,000 in the first year, there was still not enough resources for me to grab onto in order to scale,” she explains.
Isiadinso, professionally known as Chi the Prototype, is a business consultant and the creator of Forever a DreamHer, a podcast that shares tools and resources while also highlighting entrepreneurs and professionals.
Chi, who has been a dual entrepreneur since 2015, credits grants for aiding in the growth of her businesses.
When it comes to going for grants, there’s a lot to know as they are far from one size fits all. From company size requirements to location limitations, you’ll want to check that you’ve found the one fit for your business.
Types of Business Grants
Private Small Business Grants and Awards. This funding is offered by corporations, associations, foundations, societies and other organizations looking to help businesses launch or grow.
These grants require a bit of digging because there isn’t a centralized database; however, once you land the funding, it will feel like time well spent.
State Small Business Grants. These grants are available through state agencies. Because you’re usually competing with only businesses seeking this funding in your state, this tightens up the applicant pool and lessens the competition.
There are cases where some state small business grants run across several states. Unlike Private Small Business Grants, databases are in place to aid in these grant searches.
The EDA partners with communities and regions directly by offering grants and working with them.
The State Business Incentives Database offers a map feature where selecting your state populates grant information.
SBDC consultants help business owners locate and apply for grants where their businesses meet the requirements.
Federal Government Grants. The U.S. Small Business Administration (SBA) is a government agency that was created to help small business owners and entrepreneurs. The SBA is not the sole database option for business owners seeking Federal funding.
Grants.gov provides information on over 1,000 various grant programs.
SBIR and STTR programs encourage businesses to partake in research. It’s all about finding where your business can benefit and be a benefit.
USDA is a great start for business owners working in rural areas.
DOE funds energy research and development for small businesses.
EPA is worth looking into for green and environmentally friendly targeted businesses.
NIH works with SBIR and STTR programs to fund small businesses that engage in research that supports national health.
Business Loans: Nearly Free Money
Let’s face it: Loan is a four-letter word. Some businesses think about the cost of interest and outright avoid taking out loans. While it’s understandable in day-to-day life, avoiding loans can actually harm your business in the long run.
Working capital is your safety net for your business’s various needs — from payroll problems to equipment repairs to courses to improve services.
Taking out business loans shouldn’t frighten you. The trick is to look at your books and play smart. “I believe in grants, but let’s be realistic — everybody isn’t going to get a grant,” Chi explains.
“I encourage people to put aside the fear and the scarcity mindset of getting a loan. Because a loan can really change the trajectory of your company.”
And she’s absolutely right. When you can turn a $10,000 loan into a $30,000 profit, that loan feels like free money. Chi advises business owners to be vigilant in seeking out loans with low-interest rates.
Negligently taking out business loans can cause irreparable harm to your company.
Crowdfunding: Give and Take Financing
Believe it or not, there are people who want to give your business funding. Crowdfunding isn’t for everyone, but if you can appeal to your target audience, you’ll be in a good place. Similar to grants, there are several ways to go about crowdfunding.
Reward-based crowdfunding offers investors a reward for their investment in your business. Check with family and friends to see if they’re interested in joining in.
“If you have a great family and friend base who believe in your business, why not crowdfund?” Chi says. That reward could look like early access to new services for free or at a discount.
Rewards aren’t limited to solely services. Rewards could be trinkets like branded pens and shirts or as simple as a thank you note.
In equity-based crowdfunding, businesses accept assistance from investors in exchange for shares of the business. The hope for investors is that they see a return on their investment. If you take this route, be sure to look over the deal with a financial consultant.
Lending-based crowdfunding can be a great way to secure a loan for those looking for a lower interest rate and more flexibility. In lending-based crowdfunding, investors expect a fixed return on the shares they hold.
Again, you’ll want to sit down with a financial consultant to make sure the business funding plan works for you.
Keep in mind, when using crowdfunding platforms, there are often fees. Be sure to set your end-goal high enough to not only complete the reason for the business funding as well as cover all the additional associated fees.
Finding and applying for the right small business funding can be time-consuming but worth it when you land the money you need to expand your business.
Take a break from the burden of limited finances and take a chance at new opportunities as they become available. “We’re in this journey together,” Chi says. “We’re really trying to get it in 2023.”