If there’s one thing everyone knows about forging the path toward starting a business it’s that it costs money—and usually not a small amount. What many first-time entrepreneurs might not know is that there is more than one way to fund their new business venture. It’s important for new business owners to have a solid business plan in place so that they can determine the best financing option(s) and partner(s) as they embark on this new journey. With a business plan in hand, the next critical step is understanding the types of financing help available and how to obtain them!
Small Business Loans
The funding option that most people are likely familiar with is a typical business loan. These loans typically come from banks, online lenders, and microlenders and have fairly basic qualification requirements. While there may be some variation from lender-to-lender, most small business loan lenders are interested in your credit score, some form of collateral guarantee, how long you’ve been in business, and your annual revenue. Depending on your business’ financial needs and your own experience, a small business loan may not be your first choice for acquiring startup funds. Doing a cursory investigation into small business loans is a great first step in determining if and how this option might be right for your business plans!
The U.S. Small Business Administration
The U.S. Small Business Administration (SBA) understands that a traditional business loan is not an option for everyone, especially those who are just entering the world of business ownership for the first time. As a response, they have two paths for business owners to pursue—SBA-guaranteed loans and SBA investment programs. If a bank thinks lending money is too risky, the SBA offers various loans—7(a), 504, & microloans— they will guarantee in order to help small businesses grow—we recommend using the Lender Match tool to find lenders who offer SBA-backed funding. The SBA also oversees investment programs that connect small business owners with investment companies and research opportunities to help secure funding. Both paths come with the support and reputation of the SBA helping small business owners move the needle forward toward success!
Along with pursuing loan options, small business owners might consider crowdfunding as an alternative option. Unlike loans, the money raised by crowdfunding isn’t repaid in dollars because it operates more like a grant than a loan. Those who contribute to the business might receive a reward/incentive after it launches or they might receive shares in the company itself—either way, both parties benefit! It’s important to note that crowdfunding relies heavily on a business owner’s networking and marketing skills—a lot of work goes into securing these funds and it may require more time and humanhours than you want to spend!
Let Growth Capital Help!
We know that all of these options and organizations magnify how daunting it feels to secure funding—we’re here to help alleviate some of that stress! For over 40 years Growth Capital has been working with small business owners to help fund their hopes and dreams. Our team of dedicated professionals is passionate about helping businesses get up and running so that they can change and enhance their communities. Contact us today to learn more about how we can help!