If you are a start-up company, this is one of the most difficult types of businesses to get a loan for. There is no history for a lender to look at, and this will scare most off. Banks and other financial institutions want to be able to see a history to determine someone’s success at repaying loans. Being new, startups usually are lacking in any substantial collateral to offer up against a loan. However, here are some different avenues to consider for start-up funding that may be available to you.

Starting a business with self-funding is how many entrepreneurs begin. They look to their savings to finance the operations. The advantage here is that the owner keeps their business and does not have to cede or share ownership. There are no investors to answer to or loan terms to follow. On the other hand, the owner assumes all financial risk in his or her venture and may not have the necessary funds to make a real go of the business.

A very recent option for financing a business is crowd-funding. This has gained a great deal of attention lately since crowd-funding is where a group of individuals come together with their money and fund a particular business, organization, or product. Usually, the target group in a crowd-funding effort is the market that a company’s products or services are geared for. One of the problems with crowd-funding is that the company will be in a position of explaining itself, its products, and its financial information to a large group of people. This can make the company vulnerable to having its ideas stolen or other barriers to being successful.

There are large amounts of funds available through venture capitalists along with other valuable resources. A venture capitalist is willing to invest in risky start-ups if they see the potential for a great return on the investment. A problem for an owner here is that venture capitalists usually request an ownership share in the company in exchange for their money. You still have to sell these investors on the company and the business may be subjected to restrictions that the owner will have no control over.

While not providing the sums that venture capitalists possess, angel investors can be a life-line to a new business. They do not usually have the equity ownership requirements of a venture capitalist, but an owner does have to make sure the investor’s goals are in line with the company’s. An angel investor is usually looking for a clearly defined return on their investment. However, ownership has more freedom in the business decisions of the company.

There are various government grants available to a new business. Federal, state, and local government grants issue billions of dollars a year to help businesses. These grants are not open to all areas or industries and a great deal of research is needed to find a grant that aligns well with your business. Then you have to do the paperwork and go through all the proper steps to see if you qualify for the grant to be issued to you.