If you’re trying to get your business off the ground, then the whole issue of funding might seem like an incredibly complex subject to work your way through. You may have already taken a shot at securing funds for the business, been shot down, and thought that this spelled the end of your business. This is simply not true! There’s a huge range of options you have when it comes to funding a business. Here are some of the routes you might want to consider.
I’ll start this off with the most conventional route; securing a small business loan. Unless you’ve been gathering capital for several years in preparation, then you’re going to need a pretty hefty chunk of it to get the operation going. A small business loan, fortunately, isn’t particularly “small”. In fact, it can provide you with hundreds of thousands of dollars at a relatively small interest rate. When you start trading and your projections start becoming more solid, you might realise that you took out more money than you actually needed. However, when you stack up all the factors, small business loans are one of the more inexpensive financing options you’ll have. If you think your credit rating is too poor for a multinational bank, then look around at some credit unions, or some other kind of community lender. Credit unions in particular have a fantastic record for approving small business loans.
Seen as you’re reading this, it might be that you’ve tried several lenders, and been turned away consistently. If this is the case, then you may want to consider cash advance loans as an alternative. One of the big advantages these have is that your credit rating doesn’t matter nearly as much with loans in the traditional format. Furthermore, you won’t need to put as much work into drafting a killer pitch and perfecting your business plan. Like a regular loan, you receive a given amount, and agree to pay it back by a certain date with a fee on top. The main difference is in how you pay this fee back to the lender. In this format, you let the lender keep a portion of your business’s daily credit card sales. This goes on until the fee is paid off in full. Obviously, the interest rates on one of these loans may make you cower somewhat. However, there are a wide range of lenders with varying rates, so you’ll probably be able to find one for you. Here’s some more information about cash advance.
Crowdfunding platforms are a fairly recent development in the way of business financing. Some people think it will change the world of finance forever, whereas others think it’s a passing and unstable fad. You’ll have to make your own mind up about it. One thing that’s certainly true about crowdfunding is that it’s been responsible for starting businesses! Companies like Indiegogo and Kickstarter have become pretty prevalent in recent years. It works through hopeful entrepreneurs drafting a pitch and posting it on the crowdfunding platform of their choice. From there, anyone with an account on the platform can contribute money to a given financial goal. Depending on the platform’s rules, you may be able to keep all the contributed money, whether you reach the quota or not. On others however, you either hit your target or get nothing. The big downside tied to this option is the transaction cost which comes with receiving the money. On some platforms, this can be as steep as 10%! You also need to have a good incentive for your customer base to get on board. Unless you have that, it’s best to stick to more conventional options.
Finally, personal assets. When our capital isn’t in the form of currency in our bank accounts, it can sometimes be easy to overlook it. In all likelihood, you’re probably sitting on a lot of money which you never thought could help your business. Seen as you already own this capital, your investor pitch is going to be pretty simple! You’ll also be able to lower your interest rates by offering a car or home as collateral. Of course, there are some pretty big risks in cashing in all the assets you have, or breaking into your life savings. When you’re working for someone else, you’re likely to have a pretty diversified investment portfolio. Even if they all go to hell, you’ll have personal assets which you can fall back on. When you break into all your personal assets to fund a business, your future security will hinge on your business’s success.