If you run a small business or a startup, you may be looking for funding options to help get your operation off the ground. Maybe you are considering becoming an entrepreneur and wish to start a business in order to provide yourself with a source of passive income.
Whatever may be the case, one thing is certain. Running a business costs money, and if your business is in its infancy, that can be the one thing there is just not enough of. If you don’t know where to look, you’ll be to know that there are plenty of ways to get the funding you need.
1.Take Out a Bank Loan
One of the most obvious sources on this list is to get a small business loan from a bank. You can use these funds to expand your business, as well as purchase inventory.
A bank loan is a great way to get the necessary cash flow that a business needs to operate. However, you will need to prove that you can pay it back. This is a common challenge small businesses face, and it can be nerve-wracking when you’re dealing with customers who don’t pay for services, or when you have unsold products on shelves.
If you have never applied for a business loan, there are useful resources and advice in the form of online articles that explain how to get a business loan on nearly every corner of the internet. Do your research and find a lender that can accommodate you.
2. Apply for a Business Line of Credit
Another smart option for funding business growth is to apply for a business line of credit. These differ from traditional loans in a few ways, one of which is the flexibility they offer. With a business line of credit, borrowers are given a limit on the amount of money that they can draw from, but only pay interest on the money that they spend.
While payment amounts and payment schedules can vary from lender to lender, you can use a business loan calculator to find out how much interest you will have to pay, and get a better idea of how much your monthly payments could be. We recommend shopping around to different lenders to find the best interest rates and plans to fit your company’s needs.
3.Government Lending Programs
There are numerous government regulated lending programs. For example, the Small Business Lending Fund is a dedicated government fund that provides capital for small business loans through specific lenders in each U.S. state.
The MBLF is a dedicated fund designed to provide capital to qualified community banks and community development loan funds (CDLFs) in order to encourage financial institutions to make loans available to small businesses.
4.Get a Micro Loan
In 1992, The Small Business Association established microloan program to increase the availability of small loans to small-businesses. Through this and similar programs, borrowers can receive up to $50,000 — with the average loan amount sitting at about $13,000
Money from micro loans can be a great way for those with low credit scores to get the money they need to for things like working capital, inventory, supplies, furniture, fixtures, machinery and equipment.
When applying for loans, consider these questions carefully:
- Do you have a business plan?
- Will you be able to make the monthly payments?
- Who are the available lenders in your area?
- Are you willing and ready to invest your own money in the business?
5. Start a Crowdfunding Campaign
Sites like GoFundMe and Kickstarter are platforms for individuals and small businesses to find funding for business growth. They also offer the ability to offer incentives to those who would donate. Offering incentives for larger donation amounts is a good way to offer value to contributors, as well as entice them to donate more than they potentially would without incentives. The Better incentives you offer, the more likely you are to reach your funding goals when using these, and similar platforms.
The great thing about using this amazing resource is that you only have to pay a small fee or percentage to the website hosting your campaign. There are no loans to repay or interest rates.
Crowdfunding is in essence, free money.
6.Raise Money from Family and Friends
If you’ve examined your options and still need more funds, one option you might consider is to ask your family and friends to invest, contribute, or loan money to help you keep your business running.
While this is probably a last resort to consider, it could potentially be the difference between staying in business, or closing your doors, which is something that no entrepreneur wants. If you are in a tight spot, asking your friends or family for a loan or contribution could prove to be a valuable lifeline.
Securing funding is essential for the success of any business, and finding sources of financing can be tall order, but by studying your options you can make the right choice for the future of your business.
These are just a few options to consider, and we have barely scratched the surface. There are many other ways to get the fund you need for your business such as SBA loans, Credit Cards and Silent investors. Keep your eyes and ears open!
Are you a small business owner? What methods of funding your business have you found helpful? Leave us a comment in the section below.