Running a business is both incredibly rewarding and exhausting all at the same time. While you might love what you do and love the fact that you’re your own boss, you have countless things to keep track of. One such thing is money.
Whether you’re just getting started or you’ve been running your business for years, there’s always a chance you’ll need some financial assistance. You might be trying to get your business off the ground, or you might be trying to grow. You may need more inventory, additional staff, or even another location. No matter what, these things require amoney. Fortunately, you have options. Here are a few ways to get the funding your business needs.
There are several types of small business loans available. You can go the route of a traditional bank loan, which offers some of the best rates and terms. These loans, however, often come with strict requirements. Fortunately, there are other options.
If you’re interested in a bank loan but don’t quite meet the requirements, you can check with a local bank or credit union. These lenders typically have more leeway when it comes to lending to businesses. You can apply for an SBA loan (a government-backed loan) through a bank or credit union.
You can find small business loans through online lenders. While rates and terms might be a little higher, they generally have fewer requirements, and the application process is much more streamlined. If you don’t need a long-term loan, you may also be able to apply for a working capital loan, which offers shorter terms.
There are a few different crowdfunding sites out there, some of the most well-known being Kickstarter, Indiegogo, Patreon, Fundable, CircleUp, and LendingClub. Using these sites, you set a goal of how much you want to raise over a set period of time. You then provide information about your business and your project and ask for donations.
With sites like Kickstarter, you provide your backers with a reward. For instance, if you’re creating a product, backers that pledge a certain amount get a copy of that game once you make it. With sites like LendingClub, you repay the money investors put into your business, not unlike a loan. LendingClub has specific requirements, and you do need to pay interest.
Angel investors are successful business owners who want to invest some of their money into an up-and-coming new business. They don’t choose just anyone, however. You need to prove that you’re worth the investment.
To attract an angel investor, you need to show that you know your stuff. You need to come prepared to a pitch with a solid business plan, market assessments, marketing plans, and more. Potential investors also want to know who you and your team are, and that you know what you’re doing.
Keep in mind that some angel investors want to be silent partners, while others want to be active participants. They may provide tips and tricks, and they may stop by from time to time to make sure that you’re meeting your end of the bargain.
While not always the favorite solution, some business owners, particularly in the early stages, may ask friends or family for help. It’s not impossible, but it is more challenging for fledgling businesses to secure financing through a bank or online lender. A willing family member or friend can help you to get the startup capital that you need to get your company off the ground.
If you do want to ask a family member or friend for help, you can always draw up a contract. Put the agreement in writing, including the total amount borrowed, the payment terms, and any interest you agree to pay back. You can also get the agreement notarized for extra security.
Many businesses, regardless of size and how many years they’ve been open, need some financial help here and there. With so many available funding options, you need to take the time to consider what’s best for you.
Publish Date: July 31, 2020 9:08 PM