Business Funding Essentials for Today’s Entrepreneurs
While many new business owners are excited to invest in their new companies, few are able to pay all the bills themselves during the initial stages. It can take a large chunk of capital to get things going, from finding the right property and hiring experienced staff to purchasing equipment and stock. If you already have a variety of assets and a good credit score, you probably already know about the many avenues of funding available to you. Not everyone is in the same boat, but in recent years, more and more unique alternatives to traditional lending have become available, and more people can qualify for funding that will help them achieve their business goals. Here are the basics of business funding.
Traditional bank loans can be good for the right person, and an applicant with high credit, a down payment and assets to offer as collateral may get a competitive offer. For others, banks have to assume the risk that they may not see their money returned, as starting a small business is often fraught with difficulties that can end in disaster.
If you’ve already tried the traditional route and were unsuccessful, but are still interested in a loan, the SBA has several loan programs that you’re likely to qualify for. They even offer assistance with applications and can help you strengthen your business plan. They do not provide the loans, but rather arrange agreements with providers. There are specific criteria, but they consider things like experience in addition to your credit history while processing your business funding application.
If you’ve already established a business and have a good record of credit card sales, you may want to look into a merchant cash advance. You can apply for a loan based on your sales history, and then pay it back with a percentage of each future credit card transaction until it is paid back in full. Since it is paid per transaction, it might not feel as constricting as a monthly repayment plan.
Lines of credit can be useful tools to keep even after the initial funding is used. It works similarly to a credit card, in that lines have a limit, and payments are only made on amounts borrowed. You can apply for unsecured and secured lines, meaning you can offer assets as collateral or not.
Business funding can become complex and intensive quickly, but the many options available should mean that you can find an avenue that suits you best.