5 Options for Financing a Business
It doesn’t matter how much the economy is
Sometimes a bank may be hesitant to take on the risk associated with extending credit to a small business, especially if it’s fairly new. Luckily, SBA loans are available to help spread out some of the risk to get you the capital you need. There may be a lot of paperwork involved up front with obtaining an SBA loan, but it can pay off in the long run with lower loan rates and longer repayment terms.
Crowdfunding has become a popular option of obtaining business financing lately thanks to the internet. With crowdfunding, you don’t have to put in a lot of your own money and you could get a potential nice return. You simply set a goal, tell your story and publish your site to raise money for your venture. You have better success with crowdfunding when you promise a small incentive, usually a sample of your goods or services, in exchange for donating to your cause.
Angel investors typically will offer up their money for a business they feel is promising. When trying to attract an angel investor, be clear about what your business is, your goals and how you plan to accomplish them. They want to see that their money will provide a good return before handing it over to your company.
There’s still nothing wrong with heading to your local bank in search of an old fashioned bank loan. In fact, a good banker will be able to assess your company’s strengths and weaknesses to provide you with recommendations as to which type of business loan might be best for you and your operations. If you bundle other services with your bank, you may even be able to get a better rate on your loan.
Talk to Friends and Family
Your loved ones want to see you succeed, so they may be more than happy to chip in and give you a loan to help your small business do well. If you’re worried about compromising any personal relationships you may have with your loved ones, offer to draw up a simple contract outlining the terms of the loan they provided you and how you plan to pay them back over time.
If you’re creative, you can find ways to fund your small business that don’t end with you incurring substantial debt. Think over your options to decide which is right for you–you may even want to spread out the risk and try more than one option.