You have a great idea for your small business. You have a wonderful location scouted out. What now? It may seem obvious, you need funding to get started. Do not let your lack of funds to be your reason for walking away from the opportunity.
As the economy changes businesses are looking to expanding and many times this goes along with searching for lenders. Many lending options for those are starting a new business or expanding the one that you already have.
Formal Lending Companies
Several formal lending companies like banks, credit unions, and grants can help with funding your business.
- Banks, Credit Unions – This institutions offer several ways to borrow money for your business. One of these ways is through debt financial. This is where you are given a loan and have a schedule that you will have to repay it in.
- Grants – These are offered through different companies and government agencies. They can be niche specific or just general funding grants. Grants are available through federal, regional, and state programs. Most commonly, grants help to increase innovation within the businesses.
Outside the Box
Now more than ever people are beginning to look outside the box of formal lending. There are so many options open to those that are in need of small business funds.
- Friends and Family – This one has to be mentioned even though sometimes this might be the worst option for some. This is one alternative to traditional financing. Friends and family offer you no or low interest compared to a bank. However, it is important to remember that this can put strain on the relationship as well.
- Presales – This is an outside the box option that works for many companies. You are able to sell your products ahead of time. This can offer you some or all of the funding needed to produce the product and get it into customer hands.
- Merchant Cash Advance – This is similar to presales for businesses that do not have product to sell. This is a common suggestion for many restaurants. A Merchant Cash Advance is where an individual can purchase a future amount of the business. This is most common for places that run a high volume of credit card receipts.
- Crowdfunding – This new option has started to become popular all over the world, and for more than just not for profit events. Crowdfunding can offer a boost to help you get started when you are in need of funding. Some of the platforms allow you to offer product for funding, and others uses equity.
Finding the right form of small business lending is very important to the success of your venture. Weigh all your options and choose the one that is best for you.