Small Business Founder Funding

Small business founder funding is probably the easiest option for financing your small business startup. With this type of funding there is less risk to external parties, as they are lending to you personally rather than to your new untried business. As you are giving a personal guarantee, you are far more likely to be offered the funding.

Using Your Savings

Founder funding is where you sink your own savings into your new venture, and is one of the most common sources of funding for new ventures. If you select this method of funding, make sure that you keep something in reserve for emergencies or unanticipated expenditure.

Things can and will go wrong, and no one is able to plan for every contingency!

Using Funds from a Personal Loan or Credit Account

If you do not have savings available to finance your small business startup, another option is to talk to your bank about a personal loan or to use a pre-existing line of credit.

The risk with this type of founder funding is that regardless of the legal structure you choose for your small business, you will be personally liable for this type of loan.

If your business does not succeed, you will still have to pay back the loan plus interest and you may very well have no income to do it with!

Using Your Credit Cards

Credit Cards are another option, but usually a bad one as they charge a ridiculously high interest rate. Only use them as a last resort, or where you are able to pay off the full balance at the end of the interest free period.

The same risk applies as for personal loans. You will be personally liable to repay the debt, regardless of how well (or how badly) your small business is performing.

Other Sources of Funding

If this form of funding is too risky for you (or just not available) you might want to check out the other forms of equity funding, or debt financing.

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