Starting a new business is often nothing short of a hurdle-race. As an aspiring entrepreneur, you may see a great opportunity in launching your own business. However, there’s also an endless list of challenges that comes with it. One challenge that’s common to any type of business is raising money for the capital. And a good amount of capital is vital for every business to have a smooth start. The good news is there are several business financing options available today. A business loan is probably the first thing that comes to mind. But here’s a list of some other sources you can explore.
Quick List of Funding Options for Your Business
This is one of the easiest ways to fund your startup. You can use your personal savings, credit cards, or borrow against your home. You can also consider selling some of your assets to get the much-needed capital for your business. But the most obvious downside to this is that your valuable savings are at stake. Nevertheless, this is an option to consider before you explore other sources.
Traditional Term Loans
You can opt for a personal loan from a bank. A bank loan comes at a much lower interest rate compared to credit cards. This is a great option if you have a good credit score. However, without a decent credit score a bank loan may be difficult to obtain.
Small Business Administration Loans, known in short as SBA loans are another source of funds for small businesses. When banks are reluctant to offer you a business loan, the SBA-backed small business loan opens a great window of opportunity. The SBA provides loans to small businesses under a variety of business loan programs. No doubt your business has to satisfy certain eligibility criteria to qualify for these loans. But they’re certainly worth your consideration.
In the absence of a good credit history or the collateral needed for a business loan, you could try for a microloan. A microloan is a small business loan offered by microlenders. A microlender refers to a non-profit organization that provides small-sized loans to businesses. The best part about microloans is that they come with more flexible underwriting criteria and require lesser documentation than banks.
If every other source fails to get you the funds you need, you can turn to angel investors. ‘Angel investors’ is a term used for wealthy individuals who are willing to invest in start-up ventures in exchange for equity stake in your new business. They offer the financing you need to kick-start your venture. Sometimes they’re also willing to provide necessary guidance and to use their contacts to help you establish your business. You can locate an angel investor through networks such as MicroVentures, Band of Angels, and Angel Capital Association.
Unless you already possess the money you need to start a business, raising funds is not easy. It requires careful planning and serious effort. Explore these funding options to give your business a smooth start. Whether you opt for a small business loan, SBA loan or any other commercial loan, weigh your options carefully. Understand the benefits and downsides involved in choosing each type of funding. The fact is that entrepreneurs today have a wider range of financing options than ever before. So use this to your advantage and make the right choice for your business.