No matter your goal - new equipment purchase or attracting additional customers to a retail location - understanding all available financing solutions is an essential aspect of success.
Many small business owners know the disappointment and anxiety associated with applying for a small business loan from traditional lenders and filling out mountains оf paperwork, often only tо receive numerous rejections. With careful preparation and an exploration оf alternative lending solutions, however, this obstacle can be overcome quickly tо get your business off the ground.
Funding for Your Small Business
Your business financing options depend on why and what kind of funding it needs, including factors like its purpose (credit score and years in operation). There are a variety of sources for funding available including banks, online lenders and grants which could potentially provide support.
Banks and credit unions can be an excellent resource for business loans, particularly local institutions with strong ties to the community. Applicants have reported higher approval rates and greater customer satisfaction with smaller banks over larger national institutions.
The US Small Business Administration offers a lender match tool that can assist in finding lenders who offer SBA-guaranteed loans. Also consider SBICs, which are privately owned and managed investment funds which use both their own capital as well as funds borrowed with SBA guarantees to make equity or debt investments in small businesses. You can learn more about them by visiting the SBA website.
Traditional vs. Alternative
Dependent upon your business needs, you have two financing options to choose from when financing your company: traditional and alternative. Traditional forms of funding include bank loans, private equity investments and venture capital funding while alternative funding includes peer-to-peer lending (P2P), crowdfunding platforms or any online solutions which provide more flexible solutions than a bank loan.
Traditional lenders include regional or local banks as well as branches of national banks that specialize in lending to small businesses. Their loans may provide face-to-face service with dedicated loan officers specializing in helping startups. Traditional lenders usually have more stringent requirements based on your personal credit score but have lower interest rates compared to alternative lenders.
After nearly collapse of the US banking system, additional regulations were implemented making it harder for banks to take risks; as a result, they became selective about who they would fund, creating an opportunity for alternative lending markets to fill.
Secure Funding with a Plan
An effective funding plan is the cornerstone of successful business financing. It shows your commitment and preparedness, making you more appealing to investors and lenders.
Before approaching banks for financing options, it's essential that you familiarize yourself with all available financing solutions and select one that aligns with your business goals and financial needs - this means comparing interest rates, fees and repayment terms in detail.
As part of your loan application, be sure to have both personal and business credit scores that are at a satisfactory level to increase the chances of approval. Consider alternative forms of financing like crowdfunding or using a business credit card which will build both credit while helping manage expenses more easily.
Building a supportive network of people who can offer time, knowledge and resources can also help your business secure funding. Attend industry events, join relevant communities and connect with fellow entrepreneurs and business owners are great ways to do this.
Choose Wisely
Make an informed choice when selecting financing solutions. By learning about all available sources of funding and carefully considering your individual needs before seeking legal guidance for advice, it is possible to find an optimal financing option to fuel your entrepreneurial dreams.
Since 2012, when its launch by the ABIM Foundation's Choosing Wisely campaign began, its impact has been profound. Exam rooms around the globe have participated, thousands of journal articles have been written on it, and similar initiatives around the globe have also taken notice. But its true power may lie in how it changed people's perspectives on health care and physician roles.
One key to the success of Choosing Wisely lies in its grassroots nature: individual medical societies can use its recommendations tailored specifically to their specialties to craft specific recommendations that reflect them. This allows physicians to take ownership and feel empowered to drive change within their hospitals and communities - for instance, Gold Coast University Hospital in Australia used Choosing Wisely recommendations to reduce unnecessary pathology testing resulting in savings of GBP 1.19 (USD 1.56) per patient.
Funding Beyond Startup
Turning an innovative idea into a successful startup requires a combination of innovation, perseverance and access to appropriate funding options. Bootstrapping or seeking financial aid from friends and family may only take an enterprise so far when growing operations and scaling operations.
Alternative financing solutions for startups may include working capital loans, which provide funding to cover expenses while expanding or purchasing inventory to meet demand. Small Business Administration loans provide more favorable terms and lower interest rates than traditional loans while government grants can also provide non-dilutive startup funding solutions.
Securing external funding requires more than simply fulfilling certain criteria; it also necessitates creating an impressive business plan and financial projections, as well as building professional relationships with potential investors or lenders. Collaborating with established companies may also speed up growth by opening distribution channels and customer bases faster and hastening time to stability.
Manage Your Funds Like a Pro
Funding your business through personal savings is one way to avoid credit card debt and retain control. You have more freedom in choosing what expenses are necessary and which expenses can wait until more revenue starts coming in. Also consider adding business emergency savings into your budget plan; Bankrate reports that 22 percent of Americans do not have any emergency savings accounts at all and 30 percent only have six months worth saved away.
Utilizing credit cards may provide another financing solution; however, its long-term viability should be carefully considered as interest rates tend to be high and carrying large balances can damage your credit score. Establishing a business credit card may help your business build credit; such cards typically offer lower financing rates and monthly payments than individual cards.
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