Many people ask how to apply for grants to get money to start a business. Starting a business can be expensive and it's understandable that a new business owner would look for "free money."
If you're thinking this sounds too good to be true, you're mostly right. There is an extremely limited number of grants available to for-profit businesses. The best list I've found is Nerd Wallet's Small-Business Grants: Where to Find Free Money, opens a new window.
So what's an entrepreneur to do? There are four main ways to get money to start your business: bootstrap it; friends & family loans; bank loans; and private investors.
Admittedly, this doesn't involve getting more money. Instead, you try to stretch every dollar. This might look like:
- Buying a cheap desk on Craigslist or at a used office furniture store
- Finding free (and cheap) ways to market your business
- Asking your friendly Business Librarian for help identifying your target market—to request an appointment, go to the Business Help page
Here are a few books to get you started.
Friends and Family Loans
You can ask family or friends for a loan or a gift of money. Or you could ask them to be the first to buy your product or service. For tips on how to do this, I suggest the article Asking Friends and Family for Money: Keep Them Too!, opens a new window
Another extremely popular option is to use sites like Kickstarter or Indiegogo. Doing this often requires a lot of work (and money, ironically) to create an engaging video, create rewards and send out those rewards.
If you decide to take out a loan from a bank or other lender, you'll want to select a trustworthy institution that will give you the best possible interest rate. One option is to consider lenders who partners with the government agency the Small Business Administration (SBA). While the SBA doesn't lend the money, they set the guidelines and guarantee the loans, opens a new window.
To learn more about these options, refer to the Financing Options, opens a new window section of the Colorado Small Business Resource Book, opens a new window. For additional information on how to get a loan, check out these great books.
Also known as angel investors or seed investors, these are private individuals with a high net worth who have decided to invest in startups. But it's not all magic. If you want to get funds from an angel investor or a venture capital firm, you will typically need to:
- Have a well-written and comprehensively researched business plan
- Create a pitch deck, which is a set of slides that explain why your startup is a good investment
- Develop a plan to have your business either have a very high return on investment OR have a strategy for your business to be acquired by another company for a large amount of money
If this seems like the right fit for your startup, there are many resources and books to help you get started. Here's a brief list:
- Business Librarian at Arapahoe Libraries - Request an appointment with them on the Business Help page. They can assist you with market research.
- Aurora South Metro Small Business Development Center, opens a new window - Free business consultations on many topics, most important in this case would be cash flow projections and funding sources.
- Rockies Venture Club, opens a new window - This is a group of angel investors with a leadership team that focuses on education. They offer classes, pitch events and conferences focused on funding startups.