The world of business financing can be confusing, especially for the first time businesses.
With no business history, many of the lenders often consider startups as risky ventures.
Fortunately, there are plenty of avenues for startups to secure business loans. If you’re in the dark on how to go about it, you start here to learn how to get a loan.
A crucial component for successful loan acquisition is finding lenders or rather a type of loan that fits your small business needs.
In the section below, we shall explore the seven funding options for small businesses.
Small Business Loan
The U.S. Small Business Administration is probably the most traditional business startup on our list.
The SBA is a microloan program that offers small business loans or grants available through the government.
While the SBA loans are not Direct loans, the government works with lenders to reduce risk.
On the flip side, however, they’re a challenge to get and have strict eligibility requirements.
Business Card Credit
Business card credit is a great alternative to the SBA.
While they’re not a traditional business startup plan, they’re quite essential in separating between the business and personal finances.
When choosing a card, we recommend you go for those with 0% introductory financing offer to allow you to make a purchase and carry balances without the need of paying interests.
Micro Lenders
Microlenders are a suitable option for entrepreneurs seeking for low-cost business loans.
As their name suggests, they are “micro,” short-term loans with low-interest rates.
They are often extended to startups with low capital requirements.
Most of the microlenders are non-profit organizations and are focused on financing small businesses in small increments.
Some of the popular microlenders are KizaVip, Accion, Grameen America, and Trust leaf.
Logbook loans
Logbook loans are credits secured on your car; this means that the lender will possess your vehicle up until you settle the debt altogether. Your vehicle acts as the security; however, you will keep driving your car while you repay the loan. The amount you can borrow is subjected to the value of your vehicle and how much you will be able to repay every month. If you have a difficult time getting finances, use easy logbooks loans in the U.K. to borrow money depending on the value of your car. Logbook loans are useful when you need cash or if you have a poor credit rating.
Business Grants
Who does not want free money?
While grants are an incredible way to secure money for small business startups, they are challenging to secure since many businesses are applying for these loans.
Though they’re not to be considered as a replacement of the traditional business loan, they’re worth giving a shot at.
Crowdfunding
Crowdfunding is increasingly becoming a popular way for small startups to raise money.
Sites such as Kickstarter, RocketHub, and GoFundMe, will allow you to solicit funds through online campaigns.
Other crowdfunding avenues will even allow you to tap into a public pool of investors who will finance your startup in exchange for equity ownership.
While crowd funding is not credit necessarily, it’s an ideal funding option or the entrepreneurs with products and looking to validate an opportunity.
Angel Investors and Venture Capitalists
Angel Investors and Venture Capitalists tend to be more specific in their funding options, and if you fit into their category, you can receive anywhere from a tune of $25,000 to 1k.
Venture capitalists, in particular, usually invest in high-growth companies.
Either way, these two funding methods will require you to give up an equity position or shares in your company.
The Angel Investors and Venture Capitalists offer a great way for small startups seeking large sums of financing.
Friends and Family
According to Small Business Trends, more than 80% of startups come from friends and family members.
Personal savings and financing from a friend is among the best funding options for your startup and can boost your business to new heights.
However, as much as you kin are willing to offer a helping hand, you must take their financing with lots of care. Rather than pestering your family, we recommend that you branch out beyond your immediate circle and look for funding to anyone or organizations that might be interested in what you’re doing.
