Perhaps one of the most asked questions for people who are starting a business or looking at how to grow their business is – where and how I can get funding.
And it makes sense because many small businesses can’t get off the ground without a little financial help. Not to mention that funding can help them grow further and succeed too.
So, where can you look for funding? Keep in mind that not everyone will have access to the same things, credit checks will make a difference, and not all options are the right solution for all businesses.
IMAGE CREDIT: Photo by Alexander Grey on Unsplash
Crowdfunding
Crowdfunding has worked wonders for millions of startups all over the world. Often used more for product creation than a business idea, it can help to raise the capital to get prototypes made – or to allow game developers to dedicate time and resources to finish the project.
The success rate for crowdfunding isn’t high – even though there are a few standout success stories.
Each crowdfunding website will have a list of who can and should apply, and there are more options now than ever.
One of the best things about crowdfunding is that you can access the money without the worry of having a debt attached. But keep in mind that you’ll need to offer up something to the investors.
SBA loans
One of the most popular options for all types of small businesses is the SBA loan. They are designed with small businesses in mind, so they cater to what they need. There are also many small business loans that are created to deliver cash injections to minority business owners and underserved communities.
You can find out more about the sba 7(a) lending program before you make a decision. Something worth keeping in mind is that sometimes the approval process can be slow, so you’ll need to factor that in.
And in some cases, you may be required to put down collateral or a down payment.
There is a wide range of SBA loan options, and that means there will be one for you.
Banks
If you have a great credit score, you are more likely to be accepted for a bank loan – but for many, this option can be out of reach. Banks offer a trusted option for lending money, which is a big bonus for many small businesses.
With banks, you will need to adhere to strict criteria and repayments, with limited or zero flexibility. They will also expect both your personal cash flow and business cash flow to be healthy.
Smaller banks might offer more generous lending options.
Friends and Family
Often one of the first places that many people think about (but seldom ask) is friends and family. For many, the idea of borrowing from friends and family is worrying – because there is an added pressure to succeed.
Not only that, but it is never guaranteed when the money can be paid back, and that is something that many friends and family may worry about.
In general, though, if you do decide to go ahead and accept offers of cash from friends and family, it is important that you consider having some sort of paperwork drawn up with the agreement and a repayment schedule – even if your willing friends and family say no.
What makes this a great option is that you won’t be judged on your credit score but more likely by your reliability and how supportive people are of you.
It can, however, feel like a burden when people ask how the business is going or if you have not put the correct minimum interest rate to satisfy the IRS.
Online lending
Online lending can be both tempting and a problem. While many online lenders are great, and they offer repayment terms that are beneficial for the borrower. Others charge in excess of 350% APR.
Meaning what you borrow and what you pay back are wildly different.
Although these options are often short-term, it is easy to fall into a spiral with them. So, before you take any loans out using this method.
It is important that you take the time to consider which option is best for you and if it is beneficial to use a combination of options to get the total amount that you need to support your business as you start or grow. And, always look at how much the repayments are and over what term. Some loans aren’t worth the cost and might chip away at your profits for years to come.
Funding can be a huge part of growth, but there are other steps you need to take to make sure you are ready: How To Scale Your Business Quickly And Easily – Geek Alabama.
