Larger, publicly traded corporations have vast resources to fund their growth. There are not so many choices for small businesses, unfortunately. However, there are options available to fund your small business if you know where to look.
First off, you need to figure out your goal for your company.
Do you want it to eventually become a multi-million dollar business with shareholders, or are you wanting to keep it as a small business that enables you to quit your “day job”? Knowing your end goal will help you figure out how much funding you need for your growth.
Growing a business takes money
Cash on hand to buy inventory, hire help, and increase marketing efforts is often a necessity unless you are independently wealthy. This is why it is necessary to do cash flow projections to assess how much funding you need before taking out a loan. There are many options for loans, and it is wise to check into various methods before settling on one.
Bank loans are one option
Often traditional lenders are reluctant to provide financing unless there is substantial collateral, established business credit, and a detailed business plan. This is tricky for new business owners, even if their business is profitable. If you are dead-set on using a bank loan, be sure to check with smaller community banks, as they are more likely than a national bank to support a small, local company. Another avenue can be crowdsourcing. Crowdsourcing is not new, but is gaining more traction thanks to social media. With crowdsourcing, you put your idea out there, and others can fund you online. While it is not a loan, it could be a good way to garner funds and interest in your growing company.
Cash Advance Programs
Also, be sure to check with your merchant service provider, as many offer cash advance programs. Your merchant service provider reviews the past few months of your revenue, and basis your advance on that amount. This is a good option for those needing small business funding, as well as a good option for those owners without any credit or bad credit. Some providers also offer these services to those who are not clients, though it is best to check with the provider first.
Finding funding for a growing small business can be challenging, however it can be done
Banks are an option, though at times they can be hesitant to fund small businesses. Crowdsourcing is also a good choice, but there is not promise of funding. Merchant account providers can supply advances, though it is best to check with your provider before settling to make sure of their rates. Regardless of the method you choose, be sure to consider all of your options.