If you're looking to start a business or grow an existing one, you may consider seeking funding.

Business funding can come from a variety of sources, from friends and family to angel investors and even venture capitalists. But, before you dive in, it's important to understand the ins and outs of business funding.

Here are six things you need to know about funding for your business:

1. Types of Funding 

• Equity financing involves giving up a portion of ownership in your business in exchange for funding. 
• Debt financing involves borrowing money that must be repaid with interest.
• Crowdfunding involves raising money from a large number of people, typically online.
• Bootstrapping means funding your business through personal savings, credit cards, or other resources without external investors.
• Angel investors are wealthy individuals who invest in startups in exchange for a percentage of ownership or convertible debt.
• Venture capital firms invest in high-growth startups and typically provide larger sums of money than angel investors in exchange for a significant percentage of equity in the company.
• Secured or unsecured small business loans are a great way to get the funding you need without giving up equity in your business, though the interest rates and repayment terms will vary depending on the lender.
  
  

2. Understand Your Funding Needs

Before seeking business funding, it's important to understand exactly how much money you need and what it will be used for. This will help you determine which type of funding is best for your business and how much equity or debt you're willing to take on.

3. Funding Sources

Funding can come from a variety of sources, including personal savings, friends and family, angel investors, venture capitalists, and banks. Each source has its own pros and cons, and it's important to choose the right one for your business.

4. Pitching to Investors

 If you're seeking funding from investors, you'll need to create a compelling pitch that explains your business idea, your market, and your team. This pitch should highlight why your business is a good investment and how you plan to use the funding to grow your business. Investors will also  conduct due diligence screenings to evaluate your business and assess its potential for success. This can include reviewing your financial statements, conducting market research, and evaluating your team's experience and qualifications.

When considering your funding options, it’s important to understand what types of funding you qualify for.

5. Requirements for Funding

The requirements for the types of funding mentioned above will vary depending on the type of funding and the lender, especially when it comes to secured, unsecured, and Small Business Administration (SBA) loans.
If your business is looking for funding, the following will likely be part of the criteria:

• Personal and business credit scores - both of which affect your eligibility and loan terms.
• Industry - some lenders are restricted from working in certain industries.
• A signed personal guarantee – promise to repay the debt if the business falls behind on payments.
• Annual revenue - some lenders have minimum annual revenue requirements for borrowers and require businesses to share their recent bank statements and tax returns.
• Years in business - lenders can require a business to exist a certain amount of time before being eligible to apply for a loan
• Business plan, financial statements, and loan proposal – Lenders require this before they approve of the funding and investment. 
• Other business and financial documentation – this can include a photo of a driver’s license, commercial leases, business licenses, existing debt schedule, legal contracts and agreements, resume highlighting management or business experience, and more.
  
  

At Yardline, we make things simple for business owners.

Instead of applying to many different funding options to see what you qualify for, with one simple application, Yardline provides you with access to a full suite of funding products including small loans, business and personal credit cards, revolving lines of credit, sba loans, and so much more.

A team will also walk you through your options and get you the funding you qualify for in as fast as 24 hours.

Finally, it's important to understand the legal implications of seeking funding. This can include creating a shareholder agreement if you're giving up equity, or signing a loan agreement if you're borrowing money. Be sure to work with an attorney to ensure that all legal documents are properly drafted and executed.

Seeking funding for your business can be a complex process, but understanding these six key considerations will help you navigate the process more effectively. 

By carefully considering your funding needs, pitching to investors, and understanding legal and financial implications, you can increase your chances of securing the funding you need to grow your business.

At Yardline, we offer small businesses instant access to the best rates and terms to meet all of their business funding needs. Qualified applicants can receive up to $20mm in funding with rates as low as 7.49% APR* in as fast as 24 hours. Apply today and let’s grow your business together. 

*Rates for qualified applicants as of March 1, 2023