Course: Why businesses borrow money
Capital takes many forms
Other types of capital might be less familiar but are useful to be aware of when you look for funding.
Most businesses bootstrap to some degree, meaning they contribute their own money and resources to their business. This is great if you can do it until you’re able to borrow and fill in the gaps.
Many entrepreneurs have sweat equity without even knowing it. It’s the unpaid labor that you put into your business in the hope that there will be future payoff. It can look like working overtime on a great idea, creating a prototype or anything you do with your own hands.
Grants are free money that you don’t have to pay back. And they may help with training and mentorship. They’re often targeted toward specific types of businesses or underrepresented entrepreneurs. Look for grants through nonprofit foundations, business communities or your federal, state or local governments.
Sites like Kickstarter and Indiegogo can help you reach a large number of people who want to invest in your business. Typically, people give small amounts and receive a gift, equity or eventual repayment in exchange, but these sites require lots of effort without a guaranteed reward.