If you are looking for small business financing, you will find that traditional banks aren’t enthusiastic about lending you the funds you need. However, there are many more choices that are available to aspiring entrepreneurs. Here is an overview of some popular options.
If you have a 401(k), a traditional IRA or another retirement account with at least $50,000, you may be eligible to use these funds for your business without paying taxes or penalties. If your business takes off, your nest egg will grow!
Your card’s credit limit will determine the amount of money you can borrow. This is a convenient way to get access to the cash you need. However, be careful, since your credit card debt can grow quickly. Any late or missed payments can invoke higher interest rates.
Home Equity Loan
If you have at least 20 percent equity in your home, this might be a viable way to obtain small business financing. You will need a high credit score and a solid financial track record to receive a line of credit. Interest rates are low and payment terms are flexible. However, if you fail to repay the money, your home could end up in foreclosure.
Small Business Loan
If you have industry or management experience, a Small Business Administration-backed loan might be a good fit. These guaranteed loans have low interest rates attractive terms. Your business must meet a specific set of criteria to qualify.
Investors will want to see that your business has a high potential for growth. If they decide to invest in your business, they will want to influence how the business is run. In addition, venture capitalists will want to obtain some equity in the firm.
Sites such as Kickstarter attract people who want to contribute a small amount of money to your venture. In return, they expect a reward or a free product. This is a great way to raise money quickly.
If you have a decent credit score and a good financial track record, you might be qualified to borrow up to $50,000 from a non-profit lender. These small loans have attractive interest rates and flexible terms.
Friends and Family
If you have a friend or family member who is willing to help you, make sure you have a written agreement in place. This will ensure that there are no misunderstandings that will jeopardize your relationship.
Starting a new venture has plenty of challenges. Obtaining small business financing shouldn’t be one of them. Hopefully one or more of these options will help you get the funding you need so your vision can become a reality.