We’ve finally reached the final four…the last in my list of traditional options for funding your business, especially as a start-up entrepreneur.  I’ve covered the more frequently thought of methods, such as family and friends and using your retirement funds.  Using an aggregated line of credit was another choice discussed, as well as options, such as factoring and invoice advancement.

In this article, I first want to discuss…

Business Grants –

With this funding choice, government agencies, corporate and non-profit organizations award businesses various amounts of money based on certain qualifying criteria.  The money provided is not considered a loan nor does it have to be paid back.

Just to be clear, Not-For-Profits can be funded by for-profit companies; and if your mission and vision is for the greater good of the community, it broadens the way your entity can receive much-needed financial help.

Obviously, the biggest advantage to grants is you don’t have to pay them back.  There isn’t added debt for your company to overcome, and there is usually some community advantage being provided for by those receiving the grant.  Look for industry- and community-specific grants.

Things that you need to be aware of with the grant option is that the process can be tedious, long, and sometimes difficult to maneuver through when you aren’t familiar with it.  Because of this challenge, I would definitely recommend hiring a professional grant writer to help you. Note that a grant writer cannot be paid from the grant funds obtained, so if you need money with which to pay this person, you may need to use some other seed funding method to accomplish that.

There are many places to look for help with grants. The most important step toward being successful with this funding avenue is checking out websites and organizations that are looking to help.  Look at www.businessgrant.org or www.grants.gov  for an extensive list of small business grants that are available from government agencies, private corporations and non-profit organizations.

Another caveat is getting to know about the people involved with the organizations lending the money through due diligence, board member interaction, and relationship building.  It is, indeed, about relationships, relationships, relationships.  The more relationship building you do, the higher percentage of funding you can end up getting.  Because of the economy right now, pools of funding dollars are dwindling, meaning there is less and less opportunities, so these relationships are key.

Another really great option to consider is…

Startup Incubators & Entrepreneur Programs –

Business incubators generally provide free or discounted office space, business services, and business advisors for a specified period of time to start-up companies who show promise and meet their qualifications.

Incubators are often set up in areas looking for economic development or sometimes on university campuses.  They promote and offer workshops, mentorship, and help in finding discounted loans.  Ideally, you want to find one where those in charge encourage collaboration among the start-ups within the incubator.  This is a real advantage for start-up businesses, learning from other passionate entrepreneurs and “playing” together as you work at growing your businesses.

Incubators and entrepreneur programs have great advantages:

• Saving start-up costs
• Lowering initial seed funding costs
• Providing access to supportive resources

Sometimes the qualifying requirements can be daunting to new entrepreneurs, and you really need to be focused on your mission and vision in get in.  Incubators want to feel confident you will be successful.  There is also the issue of the time limit for occupying space in an incubator.  Depending on the incubator, it can vary between one and three years; and sometimes the time may run out before profitability occurs.

Take some time visiting the websites suggested and check to see where there might be an incubator in your area.  If you had experience with either of these business-funding options, comment back and share what you learned.  In my next post, I’ll review a little about loan resources that can help fund your business.