Small business owners need funding options

So much creative thinking and careful planning go into launching a new business. However, starting a small business is just as challenging as it is thrilling. As you maneuver through the early days, you are bound to face many obstacles, like finding the right source of funding for your business type and industry. Without enough capital, you will be unable to materialize your business ideas.

Secure your funds

Securing business funding for a startup is not an easy or straightforward task. For many, it is one of the biggest challenges of all. Traditional lenders are typically hesitant or refuse to work with new businesses; they lack the time in business and financial statements most lenders require.

Thankfully, small business loan options have changed in recent years. There are now many alternative options that are perfect for entrepreneurs who want to start a small business but lack the performance and credit history banks want to see. Here are a few of the most popular options:

Self-funding

Many entrepreneurs choose to check their savings first and use their personal funds. If you feel like this might be an option for you, do an inventory of your assets. This includes real estate, equity, savings account, retirement account, cars, other properties, etc. You might discover that selling one or more of these assets gives you enough money to launch your business.

Venture capital funding

If you find a willing investor, some will give you the funding you need to start your business. Venture capital funding means the investor will own a part of your business through ownership share and will expect an active role in your small business. When you discuss the terms of the business venture, make sure it is fair for both parties.

Crowdfunding

In recent years, crowdfunding has become a popular way to raise funds from peers online. There are four types of crowdfunding: debt, rewards, equity and charity. With rewards funding, for example, you do not have to pay the money back but give your backers something in return. While crowdfunding does not work for all business types, there is a wide range that can take advantage of this funding option.

Invoice Factoring

This business funding option is not a loan, but a sale. You sell your business’ unpaid invoices to a “factor”, who then fronts typically 85%-95% of the value of the invoice, minus a small factoring fee. The factor then takes on the task of collecting payment from your customer. This is a great option if your business frequently has unpaid invoices – and cash flow problems as a result – and needs a boost of working capital.

Merchant cash advance

A merchant cash advance lets you get an upfront sum of cash in exchange for a percentage of your future credit and debit card sales. Instead of making one fixed payment every month from a bank account, a merchant cash advance allows you to make daily or weekly payments (plus fees) until the advance is paid in full. The flexibility of this option has made it very attractive for new entrepreneurs and small business owners.

Do you need cash to set your business plans in motion? Consider working with the team at firstamericanmerchant.com. We specialize in working with a long list of business types and industries. You can complete the application in just a few minutes, get approved for a merchant account and have cash in your business’ bank account in less than 72 hours.