There are a number of different ways by which you can fund a small business venture. Some of them are best for start-up companies or even hobbies that make money, while others are better suited for companies that are already generating a profit, however small. The key to funding for small business is to choose the methods that will best suit your needs and expectations, and explore numerous opportunities for finding funding for a small business until you have secured the funding that you need.

1. P2P Lending
P2P Lending is one of the greatest new trends in lending, and for good reason. What P2P lending achieves is the creation of new possibilities for lending by people that are far less tight-fisted than the average bank or lending institution. P2P lending websites such as Prosper, Kiva.org, and unitedprosperity.org make it possible for interested investors to give loans to small businesses that need them. This is all working as part of the micro-financing revolution.

2. Bank Lending
Bank lending used to be the only way to secure the financing that you needed for a small business venture. Today, unless you have exceptional credit and a really strong business concept, you are going to have difficulty attracting positive attention from lenders. The state of the economy has made bank lenders and other lending institutions more tight-fisted than ever with their money, and this is going to prevent you from getting a traditional loan where in the past you may have been able to.

3. Friends and Family
In the past, one of the most classic methods of funding a small business was through friends and family members. Of these three classics methods of obtaining funding for a small business, a good way for you to get going with your business is to borrow money from family members or to solicit investing from interested members of your family. Family members can definitely help with the earliest phases of your business. They tend to require only a high overview level of your business. Any funding that you can obtain for your business through friends, family members and other interested parties will be beneficial, as long as you understand the need to be responsible when borrowing money from people that you care about.

4. Angel Investors
Angel investors really are capable of being angles when it comes to seeking lending and investing for your small business. Also known as business angels, these investors are individuals that have the financial means to invest in your company with special provisions. They often want to do more than just invest, but rather also want to help with the business as well. Once they have a financial stake in your company, these angel investors will likely want to play a large role in the development of the company until the provisions of the business deal are met. When working with an angel investor, it’d be wise to have an exit strategy in place to protect your interests.

5. Business Grants
Government funding for small business is actually one of the least favorite way of funding for small business for many people. There are a number of government-run organizations that claim to be capable of helping people with grants and other government funding for small business, but the truth is that this government funding can be virtually impossible for people to obtain. In other words, you could end up taking up a lot of your valuable time only to find out that you’ve been screwed with a dead end. You could end up with half of what you anticipated or far less if you get anything at all, so unless you’re desperate for funding, leave this one until the end.

6. Hard Work
Forward profit generation is one example of obtaining funding for a small business. Forward profit generation involves selling something to earn a profit, keeping the profit within the company and using it to fund the company’s next phase of business. This will make sure that your business is constantly profiting, and allows you to earn much of the funding for a small business that you need internally rather than through other sources. Best of all: There’s nobody to pay back, the money is all yours! Another low risk method of earning money is to use your savings to keep your company going. The safest way to do this is to rely on your savings rather than a paycheck while the business is getting started, and using your salary money to keep the business going. Funding your business through hard work isn’t as easy as simply filling out a loan application, but it can and will pay off in the end.

When it comes to obtaining funding for small business, it is vital that you use all of these sources responsibly regardless of what level of growth your business currently is in. You need to consider personal liability when you are borrowing funding for a small business as well as personal relationships and professional relationships when soliciting investments from interested parties. If you do not put enough care into the investing and funding portion of your business as it grows, you may step on toes and end up alienating interested investors and lenders in the long run if you aren’t careful.
You should also keep in mind that during the credit crunch and the slowed economy, you’re not the only company out there looking for funding. Everyone is fighting for a very small quantity of funding from investors and government grants and funding. Be patient when it comes to the investing that you need, and try to find internal sources for funding for small business before you have to rely heavily on funding from outside sources.

By Kevin Gillett
Kevin Gillett is a technologist, blogger, and serial entrepreneur.
His current project is Blog Traffic Exchange enhancing the blog reader experience and growing blog traffic.