Securing the funding your business needs requires careful planning and research into the financial options available to you. You should explore all of your options in order to find the resources that will be the most useful for your business.

Types of Funding

Self Funding: Many new businesses find their initial source of funding in personal savings accounts, 401K’s or credit cards, a.k.a. bootstrapping. The benefit for business owners is that you retain complete control over your business. This means you accept all the risk, as well.

Private Sources: Private sources are essentially your friends or relatives that provide startup capital to help get you on your feet. Usually, funding comes in the form of loans with very little to no interest. While these sorts of loans seem very attractive, you should be sure you still get the terms of these agreements in writing.

Banks and Credit Unions: Small business loans are one of the most common sources of funding. Unlike investment funding, you don’t have to forfeit any control over your business, but the burden of proof is much higher for a startup than an existing business. Preparation is key to securing a loan. You’ll need a business plan, expense sheet and long-term financial projections to make a strong proposal. To find a lender in our area, visit the National Information Center.

Venture Capital Investments: Investors can provide you funding in exchange for equity or an ownership share in your business rather than debt. Venture capital firms tend to focus on high-growth businesses and potentially high-risk investments with the hope of high ROI.

The Austin metro area has a thriving venture capital community. You can check out organizations such as the Central Texas Angel Network (CTAN), one of the most active single-chapter angel groups in the US, to learn more about how to find investors in the Austin area. We do recommend legal assistance before accepting any investment funding.

Grants: Grants are funding that you only receive if you meet the qualifications of the program and your application is chosen. Grant funding may come with stipulations such as maintaining a diverse workforce. You may consider looking into programs that support different kinds of startups such as women-owned businesses or veteran-owned businesses. Both public and private funding is available.

Here in Texas, you can visit Texas.gov eGrants to find funding programs your business may qualify for. The federal government also offers grant funding options such as Small Business Innovative Research/Small Business Technology Transfer Funding. SBIR/SBTT grants encourage entrepreneurs to explore their technological potential and profit from its commercialization. You can also search grants at Grants.gov to learn if you qualify for any funding programs.

SBA Loans: Through its local SBA offices in Texas, the US Small Business Administration offers several loan programs that can provide financial assistance to small businesses. While the SBA doesn’t directly issue loans to businesses, it works with partnering institutions and organizations to set guidelines that will reduce risk for lenders and make loans more accessible for businesses. Visit SBA.gov to learn more about applying for SBA funding.

Crowdfunding: This funding option calls for raising money through a large group of people called crowdfunders. Since crowdfunders don’t lend their money with the expectation of reciprocity, they aren’t considered typical investors. The Texas Entrepreneur Networks (TEN) helps businesses raise funding across the state of Texas.