A Small Business Credit Card and 13 Other Ways to Finance your Startup

For entrepreneurs who have saved up a lot of money, the only obstacle to setting up a business is coming up with a viable idea. However, many aspiring business owners usually have the opposite problem, they have the idea but they lack capital.

Clearing the startup financing obstacle is made more difficult by the simple fact that new entrepreneurs are frequently turned down for the business loans. Traditional bank loans have been tough to secure and even though loans funded by Small Business Administration (SBA) are typically more accessible, it is getting more competitive. In addition, the growing number of the SBA loan applicants means that there’s a very good chance of this program reaching its limits.

Therefore, what can a would-be small business owner do so as to finance their startup? Do not worry because this article provides a variety of other options that can help you to fund your new venture. Below is a comprehensive list of 14 options beyond bank loans that you can use to finance your startup including small business credit card.

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14. Online lending

Recently, online lending services like Kabbage and OnDeck have become a popular alternative to the traditional business loans. These lenders have the added advantage of speed; applications take only up to one hour to complete. In addition, the accompanying funds can and a final decision are normally issued within days. On the other hand, traditional loan process might take weeks or even months so as to complete.

13. Factoring/invoice advances

In case you do not want to take a loan then services such as invoice advancing and factoring might help ease growing pains for the small businesses. Through this process, service providers will front you the cash on invoices that have already been billed out. You will have to pay back once the client has settled its bill. Eyal Shinar, the CEO of Fundbox (small business cash flow management firm) says that these advances allow firms to close the pay gap between the billed work and payments to contractees and suppliers.

12. Product presales

Selling your products or services before they launch it is an often-overlooked but highly effective way for raising the money needed to finance your business. For instance, entrepreneur Priska Diaz was able to raise up to $50,000 for her company with a presale of the Bare air-free baby bottles. The money the Priska Diaz raised helped her pay for inventory. Furthermore, it helped Diaz to open some doors in retail and also learn more about her website’s visitors.

Even though Diaz benefited greatly from this means of financing, there are still some difficulties that you have to overcome. The biggest challenge in coordinating the inventory delivery times from the supplier so that you can start fulfilling orders.

apply for a business credit card online, apply for credit cards for small business

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11. Friends and family

In case you have a friend or even relative with some spare money, then that’s another potential way for financing your business without using credit cards for small business. Borrowing from family and friends presents a very interesting alternative to the traditional forms of financing. In addition, it also has some unique advantages that include low- or no-interest payments and the fact that you’ll avoid hassles of the bank contract.

10. Side business

In case you do not have business credit cards rewards, then new business owners can always try “double-dipping” as one means of funding their startup business. Alex Genadinik, an entrepreneur used his revenue from tours that he organized on ComeHike.com so as to launch Problemio.com, which usually builds mobile applications for planning and setting up a business. After receiving a few donations for some of the free hikes that he led, Alex Genadinik started charging for events, where he marketed his new website to hikers.

9. Home equity loan

For the homeowners who have equity —the value of the home minus what you owe then home equity loans are great options for financing small businesses. These loans normally offer interest rates which are both flexible and lower as compared to the traditional commercial rates.

8. Selling assets

Sometimes, you might have a financing method and fail to even realize it at first. This was the case for Hamid Saify who managed to fund ChoicePunch, his opinion-sharing community by selling a car that he wanted to pass along to his kids. Even though it was a tough decision, Hamid Saify made $30,000 from the sale of that car. In turn, that money went towards some important aspects of the fledgling startup.

7. Small business credit card

Credit cards for small business are among the most readily available ways for financing a startup and can they can be a quick way to use so as to get your business up and running. One of the main advantages of using credit cards for small business is that the minimum payment on credit cards is very low. If you’re a new business who’s just starting out and you do not have lots of money coming in, or you do not have many expenses then you can put it on credits card and pay the minimum payment.

apply for a business credit card online, apply for credit cards for small business

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6. Angel investors

Those looking to finance their businesses can always look to an angel investor if they do not have business credit cards rewards. Angel investors have managed to help to start up several prominent companies, including Costco, Google and Yahoo. This alternative form of investing normally occurs in the company’s early stages of growth, with the investors expecting a 20-25% return on their investments.

5. Venture capitalists

For the small businesses that are beyond the startup phase and they already have revenues that are coming in then a venture capital investment might be appropriate. Fast-growing companies with an exit strategy in place can gain up millions of dollars that could be used to invest, network and also grow their company quickly.

4. Winning a contest

Sometimes, businesses can actually benefit from a bit of luck. This was the case for Luis Montanez and Roberto Torres, who funded part of their startup costs for the apparel company Black and Denim with winnings from one business-plan competition. As such, even if you do not have a small business credit card, you can still fund your startup business by winning a contest.

3. Renting out your home

Cutting out liabilities is yet another creative way for the new business owners to fund their startup businesses. For Fay Johnson, editor and founder of the deliberateLIFE magazine, it meant renting out her own apartment. Fay Johnson managed to do this by placing her apartment in San Francisco on Airbnb and renting it out for anywhere between 5 nights and one month at a time. This decision has been successful for Fay Johnson who has used that money raised to fund the costs of the first issues of her deliberateLIFE magazine. Even though the move has allowed Fay Johnson to finance the startup, it hasn’t come without its own share of headaches that include tight time restraints.

apply for a business credit card online, apply for credit cards for small business

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2. Crowdfunding

Crowdfunding on websites such as Indiegogo and Kickstarter can give a very big boost to financing aspirations of smaller businesses. These websites allow businesses to pool the small investments from several investors instead of forcing firms to look for a single investment. Many websites allow companies to raise cash in exchange for products or rewards. Others usually have an equity-based model where businesses give up a bit of their share.

1. Grants

If your business mainly focuses on a research-oriented or scientific field, grants from the government might be able to help fund the company. The SBA usually offers grants through the STTR (Small Business Technology Transfer) and SBIR (Small Business Innovation Research) programs. Grant recipients have to meet federal research and development goals. They should also to have a higher potential for commercialization.

In conclusion, there are many ways to finance your startup business other than business credit cards rewards. Nevertheless, while the plethora of lending options might make it easier to get started, any responsible business owner should ask himself how much financial assistance he really needs. Companies that usually receive more income than what they truly need should be prudent in how it’s used. Such companies should make and stick to a disciplined budget so as to succeed.

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