Like many ambitious entrepreneurs, you are looking to open your own small business but do not have the money to do so. You may be wondering what your options are for financing your future business. This post will present you with a few good ways to finance your business so that you can begin on the path to success.
The first, and most obvious, option is to take out a loan. You can do this through two different avenues. If your credit is in very good standing, you may be able to benefit from taking out a loan from one of the “big banks.” This would make the process as simple as heading down the street to your nearest Chase or Bank of America. However, very few people actually get approved for business loans from these big banks. If you have anything less than stellar credit, the big banks may be out of the question. Fortunately, there are other load providers that are willing to take a little more of a risk. A quick Google search will provide you with a variety of options. The Small Business Administration is one of which that provides loans of up to $5 million for qualifying applicants. The bonus to a SBA loan? Lower interest rates than those from the private sector. There are many other options for loans that you can find online, but make sure to verify the legitimacy of any smaller or lesser known companies. If at all possible, stop by your local big bank branch and see what they’re offering.
Another well-known avenue for business financing is seeking out investors. This can be a great option for those that may have less than perfect credit. An investor is an individual(s) that will provide you a personal loan at a certain interest rate or for a stake in your company. Simply put, they give you money from their own pocket to get your business off the ground. Finding investors may seem like an impossible feat, but remember there is no rule that says a business can have only one investor. Look in unconventional places for investors. Maybe your family and friends, who appreciate your incredible work ethic and share passion for your idea, would be a good place to look. This particular route can be especially beneficial for you if don’t have good credit. Your family and friends are more likely to look at you as a person, not a credit score on a screen. If you have family and friends who believe in you and your business model, it may be worthwhile to see if they’d be interested in investing. However I feel I must caution: business and friends don’t always mix well. Remain conscious of this and act wisely.
Another option that may surprise you – credit cards. If you aren’t in need of a substantive amount of money, this may be a great option to consider. Interest rates would be higher than a loan, of course, but the benefit of low cost monthly payments may outweigh that issue. If you expect your business to be slow to start producing significant income, the option to pay the minimum may be a huge help. The freedom from worrying whether you’ll be able to afford your large loan payment each month will allow you to focus on expanding and improving your new business. If you are only in need of a couple thousand dollars to get your business up and running, this can be a wonderfully easy option to take advantage of. This course of action may not be for everyone, especially if you need a large lump sum to get your business’ doors open, but this could be a great option for those that value the option to make minimal payments each month.
There are plenty of options for financing your small business but it is up to you, the future business owner, to make the first big decision for your business an educated one. Consider these options wisely. If you have outstanding credit and need a large sum of money, consider taking out a loan at your local “big bank.” If your credit is not perfect, you still may be able to get approved for loans through the Small Business Administration or other online options, just make sure to check that the company your using is legitimate. Applying for a credit card can be the simplest option, but it is only a viable one if the amount of cash you need is reasonably low. Consider these options compared to your business’ needs and you will be able to make the best possible decision for the future well-being of your business.
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