College entrepreneurs, whether their businesses succeed or fail, will ultimately have a leg up on their peers after graduation.
Testing out business ideas while you’re in college means you have high-stakes, real-world experience that most students won’t get until several promotions into their careers.
Not to mention, it demonstrates strong leadership skills that make you an attractive prospective hire, if you ever choose to work for someone besides yourself.
But to have this experience, you may need some startup funding.
If you’re exploring college business ideas, I’ll assume you’re already prepared for the hard road ahead.
When it comes to funding, here’s an overview of some options available to college student entrepreneurs:
1. College Incubator Programs
Like “real-world” incubators, these hubs offer a community where entrepreneurs can put their college business ideas to the test with support from advisers and external resources.
Plus, they’re located on college campuses. While not every college incubator offers funding, most can help with the prerequisites, like having a solid business plan and networking with potential investors.
2. Business Plan Competitions:
These should be a no-brainer for college entrepreneurs. If your school offers a business plan competition, enter it.
Winners receive money, but regardless of how well you do, the process is an invaluable learning experience.
It will force you to formalize your plans and put you in touch with like-minded students.
This list of top business plan competitions offers an idea of what’s out there.
Here’s something a lot of college students forget: many scholarships aren’t tied to particular expenses.
Lots of private companies run scholarship competitions to generate goodwill. Winners often receive thousands of dollars.
Taking the time to scout out and apply for scholarships can yield a lot of cash you can funnel into your business.
4. Using Your Student Loans Toward Your Business
As a college student, you have unique access to student loans.
If you can figure out ways to cut down your cost of living (e.g., living off campus with roommates, cooking for yourself, limiting discretionary spending), you may have leftover loan money.
Instead of spending at Starbucks, you could use your put that money towards funding your business.
One word of warning, though:
Make sure you understand the terms of your loan repayment before taking out more than you need.
Student loans in particular cannot be discharged in bankruptcy, so you are personally on the hook for whatever you take out – no matter how your business turns out.
5. Startup Loans
Startup business loans (including equipment financing, small business credit cards, and loans from nonprofits like the SBA) can be a wonderful option for college students.
SBA microloans (guaranteed by the Small Business Administrations) are another great choice for student entrepreneurs as they offer up to $50,000 in funding plus supplementary business classes or work with counselors.
In other words:
With microfinancing, you get both the money and guidance on how to use it.
6. Startup Business Grants
Small business grants are available for very specific business purposes and certain demographics.
If your college entrepreneurship idea fits into a category where grants are offered, this is one of the best sources of funding.
Kickstarter, GoFundMe, Indiegogo, and other crowdsourcing platforms let you tap into your social network to raise money for anything.
But before you go this route, make sure you understand what you owe investors once you take their money.
It may even make sense to talk to an attorney.
8. Venture Capital & Angel Investors
Hate to break it to you, but most college business ideas won’t attract venture capital.
Still, it’s worth knowing what’s out there.
Keep in mind that, even if you don’t receive VC now, networking with people in this field as a college student could pay dividends down the road.
9. Personal Loans for Business
This last option is also the most difficult for most college students, as they often have little or no credit history.
But if you have a good credit score, a personal loan for a business may be on the table.
Be warned, though:
This option mingles your personal and business finances, which can make things sticky down the road.