Getting funding for your small business is no easy feat, especially if you’re just getting started building your company. Many banks are hesitant to loan money to businesses that don’t yet have a credit history. But businesses need money to grow, and you don’t always want to be (or can’t be) the sole financier. Let’s look at some better options than your own pockets or high-interest loans.
Unsecured Debt
Unsecured debt is a type of loan where the creditor does not receive collateral in exchange for funding. If the borrower cannot repay the loan, then the creditor cannot seize any property to pay for the debt. This type of funding can give small business owners peace of mind knowing their assets are secured if they fall behind on goals and growth.
SBA Grants & Loans
The Small Business Administration sets aside special funds for small businesses in the form of grants. These grants are gifts that do not need to be repaid, which can significantly help small business owners. SBA loans don’t come from the SBA itself, but rather through its partnership with lenders. If you’ve been turned down for a direct loan, the SBA might provide a better path.
Investor Relations
Finding someone to invest in your business isn’t just helpful in terms of funding. It’s also a testament that someone loves your idea just as much as you do! Many investors actively seek out opportunities to invest in small businesses. To connect with investors, try online fundraising platforms like AngelList, Seedinvest, or CircleUp.
Vendor Credit
One of the most overlooked opportunities to fund your business is to leverage vendor credit. This type of credit comes directly from the vendors you buy from, usually with 30, 60, or 90-day repayment options. Vendor credit is a great option if you need cash fast to run a promotion and grow your profits.
Use vendor credit to buy things for your business (or even for your home) so you can use the cash in your pocket to fund your marketing. Then, when your promotion is over and you’ve gotten your ROI, you can repay for vendors without upsetting your cash flow.
