Tag Archives: funding

10 ways to get Funding for your Start-Up

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What is one way to get funded as a start-up?

To help start-up owners get their projects funded, we asked business owners and investors this question for their best suggestions. From crowdfunding to generating user donations, there are several tips that may help you fund your start-up to scale your business and reach new goals.

Here are 10 pieces of advice for funding a start-up:

  • Seek Specific Funding
  • Know Your Price
  • Establish Key Partnerships
  • Join a Business Accelerator
  • Look Into Crowdfunding
  • Save for Self-Funding
  • Build a Customer Base
  • Reach Out to Your Network
  • Go to the Bank
  • Get User Donations

Seek Specific Funding

When researching the right path for getting funding for your start-up, consider seeking out sector-specific funding that is relevant to your business. Many lenders in the industry specialize in funding specific sectors in order to offer maximized support. Here at AVANA Capital, we actually specialize in the Renewable Energy sector. Our renewable energy lending products include pre-development, development, equipment, construction, and mini-perm financing, as well as distressed debt acquisition. — Allan J. Switalski, AVANA Capital

Know your Price

Funding is an incredibly important yet challenging part of being a founder. We mostly self-funded Kegelbell’s $160,000 that got us to market, including product testing, mold building, and FDA registration. Shortly thereafter, we took a few smaller investments as convertible notes that helped get us to where we are now. Today, we’re in the process of fundraising a larger amount that will help take Kegelbell to the next level. All that to say, I’ve run the spectrum in the world of start-up finances, and one thing I’ll definitely note is that you need to know your “ask.” Prepare and practice ahead of time and always have a success-oriented mindset. — Stephanie Schull, Kegelbell

Establish Key Partnerships

Get funding for your business through strategic partnerships. Especially for business owners with limited experience within the industry, particularly manufacturing-related industries, it makes sense to develop strategic partnerships with the best manufacturing and distribution companies to help secure the success of your business venture. With some stake in the game, these strategic partnerships are almost certain to win out when compared to other approaches. While not related to funding, in digital PR, we rely heavily on strategic partners to help grow companys’ online footprints. — Rronniba Pemberton, Markitors

Join a Business Accelerator

A great way to get funding for your start-up, especially if it’s a tech-heavy business, is to try a business accelerator or incubator. These are located across the country, mainly near colleges with business programs. Continue Reading…

How to use your retirement plan to fund your dream business

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By Eric Goldschein

Special to the Financial Independence Hub

If you’ve decided to take the leap and start your own business, you probably have one pressing question on your mind: Where will you get the money to fund it? 

Startup costs can drain personal bank accounts, and few business owners are in a position to qualify for affordable small business financing right away. Lenders tend to prefer long-established businesses. 

If you’ve been a diligent financial planner and have been saving up for retirement, you may have access to a low-cost source of business funding: your own retirement plans. Here are three ways to use your retirement to fund your dream, whether that’s an e-commerce business or a restaurant: 

1.) Use a 401(k) business loan

Some 401(k)s and other eligible retirement plans in the U.S. — 403(b), and 457(b) plans and profit-sharing plans — allow you to loan yourself either US$50,000 or up to half of your vested balance (whichever is less). 

If you are testing out your business as a side hustle and will remain employed and contributing to your retirement plan, this is an excellent option. A 401(k) loan gives you access to low-cost funding (interest rates are usually the prime rate plus 1%) that you can use to see if your idea is worth investing in further. 

You also won’t pay any additional fees or penalties for taking out this money, unless you default on your payments: in which case the IRS will treat it as a regular withdrawal, incurring penalties. 

If you need $50,000 or less to improve your new business, contact your plan administrator to get the ball rolling.  

2.) Use a “rollovers as business startups” plan

Do you need more than US$50,000 in business funding, and are you ready to work on your business full time? If so, you can use a rollover as business startups (ROBS) to access funds from a 401(k), IRA, or other eligible retirement account without penalty. 

There are a few qualifications you need to meet to use a ROBS plan:

  • Your business must be a C-corporation (if it isn’t, you must restructure it). 
  • Your retirement account needs at least $50,000 in it, and it cannot be a Roth IRA. 
  • You must be an employee of the business and receive a salary. 

The next steps are a bit complicated, but the basics are as follows: Set up a new retirement plan under your C-corp. Roll over your funds from your existing retirement plan to your new one. Then, your C-corp sells stock to the retirement plan, and you use the proceeds from that sale to fund your business—buying new inventory, renovating your space, or any other general business needs. An accountant, lawyer, or financial service can help you do this. 

This isn’t a loan, but a constructive use of your retirement funds. The biggest risk here is losing your retirement funds in pursuit of small business success. If you think that’s a risk worth taking, this is a good bet.    Continue Reading…