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Starting a business is a daunting task. Not only do you need a good idea and a solid business plan, you also need to raise funds to get your organization off the ground. Many small business owners can use their equity to start the business, but others will have to take on debt in the form of credit cards or loans.
Use the Census Bureau annual business survey data, Alternate line Compiled the most common sources of funding for startups and acquisitions.This 2018 survey is the most recent data on sources of capital funding and continues to be cited by reputable sources, including Small Business Administration. Percentages were recalculated from underlying data to exclude companies that responded that they did not need start-up or acquisition funding or did not know their source of funding.
When considering start-up capital, new businesses primarily use two types of capital: equity and debt. According to the SBA, three quarters of new business Use personal savings; about one in five use bank loans (19%).
Other sources of entrepreneurial income in both categories include loans from family or friends, venture capital funding, or leveraging the proceeds of an existing business.
Sources such as federal grants have also become more popular in the wake of the COVID-19 pandemic, and support for small businesses has increased.For example, the 2021 Biden administration Awarded $154.2 billion Federal contract dollars with small businesses increased by $8 billion from the previous year.
Read on to learn more about the five most common sources of startup funding.
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