Small business owners know that securing funds for their business is a tricky task. Banks are reluctant to lend to companies who need the funds for starting up, rather than for growth. Check out some of the different ways you can secure the funds that your small business needs.
1. Crowdfund Your Business
If conventional financing is not an option or if you have an idea that you think will be widely popular, consider crowdfunding your business. With the rise of crowdfunding websites, it is easy to crowdfund a number of ventures, including small businesses. Crowdfunding lets friends, family, or even strangers who think your business is a smart idea invest in your company.
You have a few options for crowdfunding. One is soliciting straight donations to start your company. With this option, donors receive nothing in return for their donations.
Another alternative is to utilize crowdfunding that does provide donors with some type of incentive for donating. Usually, the incentive varies based on the donation. Popular incentives include call outs to donors and free samples of your product.
2. Apply for Business Loans with Small Banks
Small community banks are more likely to approve your business loan than large institutions. Many local banks have programs specifically designed to encourage the growth of small businesses within their community.
When applying for a small business loan, be prepared to provide a business plan and proof that you are credit worthy. If your business is new, you will likely need to use your personal credit history to apply for a loan. Many banks also demand some type of collateral.
3. Check with Microlenders
If your credit is lacking or you don't have sufficient collateral, apply for a small business loan with a microlender. Microlenders cannot loan as much as conventional banks; their loans also usually have higher interest rates and shorter terms.
4. Take Out a Credit Card with an Affordable Interest Rate
A credit card with an affordable interest rate is a viable way to pay for your startup costs and initial operating expenses. Some cards even offer introductory programs with no interest and low cash advance fees.
If you go this route, make sure you always pay the card on time to keep your positive credit history. Doing so helps you secure favorable financing terms in the future.
When exploring ways to fund your small business, remember that it isn't all or nothing. If you are approved for a loan that falls short of your financing needs, the loan is still a valuable tool to help start your company. Combine multiple financing methods to get the cash that you need to make your small business a success. For more information, contact establishments like American National Bank Of MN.
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