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How to Obtain Seed Money for your Start-Up

One of the primary concerns when starting a new business is funding. You must create a strategy for obtaining your seed money and funding for your initial operations. Ensuring you have sufficient funding for your start-up company can be one of the most challenging and frustrating aspects of a new business.

It is important to be thorough when calculating the amount of start-up capital you will need. This includes costs for inventory, equipment, rent/mortgage, supplies, salaries, insurance, and numerous other expenses that a business must face in the first year of operations. In many instances, you will need seed money to pay for the costs of researching or planning before the doors to your business are even opened.

Where should you obtain your funding from? Below are a few considerations:

  • Many small business owners have good relationships with their personal financial institution, so they apply for a business loan with them. If you have a strong track record with your personal finances, your bank will be more likely to help with your business finances than one that does not know you.
  • Small Business Administration (SBA). As the name indicates, the SBA focuses on assisting small businesses. The SBA offers loans and grants to small business owners, but it also provides numerous resources and guides for how to make your business successful.
  • Angel investors. The term “angel investor” refers to a person or group of people who give money to cover your start-up expenses in exchange for ownership equity or convertible debt. You can usually located angel investors in your state by running an internet search.
  • You may be able to generate capital by using a crowdfunding website , depending on the type of business you are starting. There are several different crowdfunding websites to choose from, so it is important to research which one would be best for your company.
  • Credit cards. Some new business owners use their credit cards as a way to finance their start-up venture. However, this is risky because credit card debt can accumulate quickly, especially if you have a high interest rate.
  • Personal investments. Your friends and family may be willing to invest money into your new business. In fact, you may be shocked at the amount of money you can raise by asking loved ones. However, it is imperative that you are open and honest with your friends and family about the risks associated with the investment in order to preserve your relationship.

The attorneys at Swenson Law Firm will not only help you determine which entity structure is the best for your business, but we will also assist with the numerous other factors that will help ensure your company gets off to a successful start. Contact us today to schedule your initial consultation. The attorneys at The Swenson Law Firm provide a variety of business law services to entities of all sizes.

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