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4 great ways to fund your LLC

13th November 2019 Print

If you’re looking to start a business, there are plenty of legal steps you have to take. After choosing a name, researching your market, and doing thousands of other small projects, you need to be able to fund your business.

When it comes to looking for financing and funding, many people often turn to the bank for a small business loan. Lately though, that’s been quite difficult as the big banks are routinely rejecting small business loan applications.

If you’ve decided to start an LLC, a limited liability company, then you might have run into some issues finding funding or acquiring a loan. Since an LLC protects your personal assets so greatly, many banks stay away from handing out loans in case there is an issue with you being able to pay the loan back.

So, where exactly do you go? Thankfully in today’s day and age, there are plenty of other options for you to pursue if you want to get your business off the ground and running.

Below, we’re going to review six different ways that you can fund your LLC and turn your business dream into a reality. 

Fund it Yourself

The best person you can trust with this is yourself, so why not bring your own savings to the mix? Bootstrapping your own LLC may be difficult, but it should be the first place you look. Hopefully, you have been diligent about saving money

Even if you do land a loan, you will probably have to fund part of the business yourself. That way, you won’t have to give up any ownership or look for a partner to come in.

If you do have a partner (LLCs can be run between 1-infinite amount of people), then you may want to pool your money together. If you’re not contributing equal amounts of money, then you’ll have to set up some kind of partnership agreement to equally divide up profits and losses.

SBA Loan

While some banks may turn you away, the small business administration is more likely to hear you out and give you a loan. The primary difference between SBA loans and a bank loan is that the government will agree to cover part of the costs of an SBA loan in the case of the LLC defaulting on the loan. 

With SBA financing, you’ll see two options: traditional term loans and lines of credit. Since the government is going to be covering part of the loan in case of defaulting on the loan, you’re going to have to write a very thorough and detailed business plan, go through an interview process, and wait to be approved.

It’s a great option but by no means the fastest of the group.

Line of Credit

To receive a line of credit, you can either head to your local bank or go to a credit union. What exactly is a line of credit, though?

A line of credit or LOC is a predetermined borrowing limit that is available for use at anytime. The borrower (you) can take out money when you need it until reaching a limit. In order to borrow more money, you have to pay back on that line of credit.

The bank or credit union will set the limit which will remain stable for the timeframe or until renogitation takes place. While a line of credit does offer great flexibility, it does usually come with high interest rates and heavy penalties for late payments. 

The Miscellaneous Group

While all of these are seperate, there so random it’s best to put them into one group.

Asking your friends and family may not seem conventional, but is actually one of the most common ways to fund a business idea. More than likely, they will want to share in some of the profits meaning that you might have to bring them on as a member of the LLC.

Another unconventional way is to head out to the internet and look to crowdfund your idea. Even though it may seem bizarre to ask for money from hundreds of people, it has worked for plenty of businesses. In order to get an idea of how it works, check out popular sites like GoFundMe or Fundable in order to see how businesses have had success on the web.