5 ways to supplement funding for your business

What is one key reason why new businesses fail? Insufficient capital.

Any great business idea needs to be backed by funding — and often from multiple streams. If you've secured common sources of capital, such as a bank loan or line of credit, but are looking for supplemental funding, consider these ways to fund your business:

1. Family and friends: Use your personal network. The people who know you the best and love you the most are often the first line of supporters. While your personal network might not have much money to offer, it can be a start. Collect a little from a lot of people, especially if you have a wide network.

2. Crowdfunding: Sites like Indiegogo, Kickstarter and GoFundMe are popular ways to pool money from your social network and even strangers. As of April 2016, Kickstarter alone funded more than 100,000 projects (to a tune of more than $2.3 billion dollars pledged).

3. Government-sponsored lending programs: Federal, state and city governments offer a wide range of lending options for small businesses. Contact the appropriate government office to inquire about grants and loans. For resources from the federal government, a great place to start is the Small Business Administration (SBA), which works with participating banks throughout the country by backing small business loans. The average General Business Loan — known as a 7(a) — provided through the SBA in fiscal year 2015 was $371,628. Tip: To learn about different types of federal loans, visit sba.gov.

4. Third-party investors: If you're looking for equity capital, Venture Capital (VC) investors or angel investors may be an option. First, you'll have to win over an angel investor by pitching your business plan. Do your research about the pros and cons of VC capital and angel investing, and ask yourself the following questions:

• What are the investment criteria?

• Does the venture capital fund seek equity?

• What is the expected rate of return?

• How developed is my business?

• How much management control am I willing to give to my investor?

5. A business partner: A business partnership is when two or more people have ownership in a company in which all partners share in the financial gains and losses. One of the benefits of this structure is a shared financial commitment — the cost is split between owners. With any business venture involving multiple people, it's important to iron out the details. A partnership is like a marriage, so don't enter the relationship without thinking things through. Consider these steps:

• Determine which type of partnership fits your enterprise. There are different types of partnerships, including general partnerships, limited partnerships and joint ventures.

• Set up a contract and routine methods of reporting.

• Don't give away shares of your business without thinking it through.

• Look for investors who bring relevant experience and knowledge to your business.

• Avoid any issues with the IRS by understanding the tax laws pertaining to a business with multiple partners. (Visit irs.gov/business/partnerships for more details.)

Starting your own business?

Get more insights and helpful tips at BMOHarris.com/life.

To find out how BMO Harris can help fund your small business, visit BMOHarris.com/smallbusiness, stop by a local branch, or call us at 1-888-340-2265.

Banking products and services are subject to bank and credit approval. BMO Harris Bank® N.A. Member FDIC.