Small Business Financing Options

Many entrepreneurs have a great business idea but what they don’t have is the capital for funding that idea. In the beginning of a small business venture, your business’s revenue is uncertain and your credit has not yet been established, but you need that money to invest in a facility, inventory, and your employees and hopefully turn your idea into a successful business. There’s no universal financing method because every business has its own unique capital needs, but there are a variety of small business financing options that you should look into.

Getting a small business loan is an obvious financing option. When you apply for a loan, try to create an outstanding loan application, know the APR of the loan and any fees and seek out small banks since they’ll be more helpful toward aspiring small business owners. As a small business owner it is important to keep your personal credit score as high as possible. Small business loans take into consideration the personal credit score of any business owner with 20 percent or more interest in the company. With alternative lenders, a borrower can get a loan with a credit score as low as 500 but the best rates will be given to borrowers who have a credit score of 720 or higher. And if you’ve been rejected, pick yourself up, learn why you were rejected and apply again somewhere else using that knowledge.

Another alternative for financing can be a strategic partnership. With the right partners they can give you a competitive edge, giving you access to knowledge and people and making you more efficient and credible in your industry. This mutually beneficial union will not only help you get initial funding, it’ll help increase your bottom line once you’re more established.

If you’re looking to get financing at the startup part of your small business, angel investors may be right for you. Angel investors typically expect a 20 to 25 percent return on their investment in your business, are very thorough before agreeing and likely will want a say in your business. But this financing option also comes with perks. It gives you the money of course as well as access to knowledgeable business owners who want to help people like you starting out by giving advice and sharing their strategic experience in overall business operations and your industry. Venture-capital investors are an option if your small business is already bringing in revenue. These investors focus on specific industries, so they’ll give you great advice on what you should do next. But, they also aren’t super patient and tend to expect their investment back within a three to five-year time frame.

In today’s small business lending marketplace, it has become easier than ever to get the funding you need for you business. It no longer really matters what situation you find yourself in, there is an alternative lender out there that can cater to your needs. Remember that just because the funding is available does not necessarily mean that the cost of the funds is always going to be ideal, so shop around for the best deal, or let a qualified lending consultant help you.