When building a business from scratch, you may find no options other than using your own money or finding investors. Unfortunately, everyday business owners rarely have enough cash in the bank to cover startup costs and expenses.
Even if someone you know has enough money to fund a fledgling company in their savings account, they’re probably not going to take a risk on someone else’s idea. Luckily, businesses can always turn to an outside source for funding. Here’s your guide to financing options that will help your business put its best foot forward.
Business loans and business lines of credit
If you can meet the requirements, a business line of credit is a great way to cover costs as they arise. With this type of credit, you only borrow what you need and repay balances as quickly as possible so that your interest charges remain relatively low.
For those looking for capital without the credit score to qualify for a loan, bank lines of credit are also available. Service providers like AdvancePoint can help simplify small business financing decisions by identifying the best loan or line of credit for your company, ensuring you receive approval quickly.
In the past few years, peer-to-peer lending has risen in popularity and quickly became a viable option for many small business owners. Sites like Lending Club and Prosper connect borrowers with lenders, making it easy to secure the cash you need. This method of financing works best for prospective borrowers who have been in business for at least two years and carry no significant risk factors such as heavy debt or bankruptcy.
Funding your new company has never been easier with sites such as Kickstarter or IndieGoGo. Using social media to spread the word about your new venture can help drum up interest from potential investors all across the nation.
In addition, crowdfunding allows you to keep equity in your company while gaining quick access to capital. Make sure you do your homework, though; while anyone can be an investor, it’s essential to make sure any contributor is still somebody who shares the same goals and values as you.
Small business grants
Small businesses grants are an opportunity for small businesses to acquire funding without paying it back. These grants often come with specific guidelines that must be followed for you to be eligible, but they can be a fantastic opportunity for qualified applicants.
Search engines might connect you with any number of government grants, some of which may not apply to your business niche. Be sure to narrow your search results accordingly to save time.
Whatever type of business you are running, there is a way for you to obtain the funding it needs to succeed. These are only some of the options available to you; be sure to research to discover what else might be out there. Also, be aware that not all financing options are created equally, and different methods can come with their advantages or disadvantages.