How Do I Finance My New Injection Mold?

From Kickstarter, to Indiegogo, GoFundMe, Rocket Hub and more there are a plethora of crowdfunding sites that have opened up, some with different focuses and all great ways to fund the launch of your project.

• Pro: Can be an effective way to gauge market interest with pre-sales while raising funding.
• Con: There is always the risk of knockoffs when you reveal a lot about a product prior to its launch.
  
  

We often think of the TV Show Shark Tank when we think of investors in new businesses and products. A quick search will reveal an equally large number of VC firms, investor networking services and listings where new start ups can find ways to pitch their product ideas.

• Pro: This approach can sometimes be better than traditional financing for operations that require large initial investments to reduce the debt the new business has to take on to get to market.
• Con: Often you are required to give up equity in your company to attract investors.
  
  

One traditional method of funding is through SBA loans and grants. While the application process and compliance standards can be cumbersome, if navigated it can be helpful for startup and ongoing funding.

• Pro: This can give a new entrepreneur access to loans with lower interest rates, longer repayment terms and lower payments than many traditional banks would offer.
• Con: Complicated and lengthy government applications, and ongoing compliance requirements can present an administrative burden for new business owners.
  
  

The bank you use personally, may also be willing to extend credit to your new business with a start up loan or a revolving LOC which can give you even more flexibility for start up and beyond. Even Accounting Software Company Intuit QuickBooks offers small business credit products these days.

• Pro: Establishing credit for your new business early on, to build on over time will make it easier to open other trade and credit lines as your business grows.
• Con: Most credit facilities will require personal guarantees of the entity’s (sole-proprietorship, partnership, LLC., etc.) owners and especially for a new business just starting out.
  
  

Many new entrepreneurs make the choice to personally finance their business, then they can work to repay that later as their business grows. These options can include using savings, charging some costs to a credit card, taking personal loans, using home equity, taking loans from retirement accounts and similar.

• Pro: Investments in your new business can be accounted for as injections of owners’ equity, plus if used responsibly this can grow and/or strengthen your personal credit history.
• Con: Some methods of personally raising funds, such as early retirement account withdrawals and personal loans can come with steep fees, penalties, interest, etc. so you should carefully evaluate those options. Also, one of the most important things to keep in mind when financing a new business venture is to make sure that you can “sleep at night” knowing that it is not going to put you or your family in a position that you cannot recover from.
  
  

There are certainly other alternative and “out of the box” methods for raising funds to cover startup costs such as product pre-sales, peer-to-peer lending and micro-lending services, Purchase Order or Accounts Receivable financing, borrowing from friends and family or offering them advisory shares in exchange for low or no interest loans and much, much more.

Remember, you should always consult your own financial, legal, and tax advisors and do your research for the approach that will work best for you and your new business. This article has been written for informational purposes only, and is not intended to provide any tax, legal or accounting advice to be relied upon.

Let the small business partnership experts at Extreme Molding work with you to manufacturer your plastic or silicone product efficiently and domestically right here in America. Contact us today!