Don’t let a lack of funding stop you from starting your small business. You can find ways to get the money you need without having to take out a loan or sell equity in your company. Here are five tips for finding and securing funding:
Personal loans from banks
If you’re looking for funding that can be used for anything, then personal loans may be the right fit for your small business. A personal loan is a type of loan offered by banks or other financial institutions that can help fund a variety of needs.
- Personal loans are typically not as large as business loans, which makes them ideal for businesses seeking short-term funding.
- Personal loans usually have lower interest rates than credit cards and SBA loans.
Small Business loans from banks
Small business loans can be obtained from banks and other financial institutions. The most common source of business loans is the bank, whose main function is to provide funding to businesses. Banks are more likely to offer loans to established businesses that have collateral or assets backing their loan request. However, the experts at Lantern by SoFi recommend, “Lender requirements vary across the board, and there are options for small business owners who may not have the strongest credit profile.”
If you’re thinking about getting a business loan, it’s important that you know what kind of qualifications banks look for in potential borrowers. In addition to meeting the basic requirements (for example, having a good credit history), here are some other items that may help your chances of getting approved:
Business credit cards
If you need a quick infusion of cash, business credit cards are a great way to get funding for your small business. You can use them to make purchases and pay bills, or take advantage of their lines of credit and apply for loans. There are many types of business credit cards out there, but one thing is for sure: they’re all much better than having no access at all.
Small Business Administration (SBA) loans
SBA loans are government-backed loans that can be used to finance small businesses. You can get an SBA loan if you have a business plan, but your bank or credit union won’t give you one. These types of loans are often available for those who don’t qualify for private financing because they don’t meet the strict requirements set by banks.
The Small Business Administration has programs that allow new and existing entrepreneurs to get funding for their small businesses through two different loan programs: The 7(a) Loan Guaranty Program and the Microloan Guarantee Program.
Peer-to-peer lending, also known as crowdlending, is a type of alternative financing. Instead of going through a bank for your business loan—which can be very difficult to get approved—you borrow money from other people in your community. This is done using an online platform that connects borrowers with investors interested in providing funding.
At the end of the day, no one knows your business better than you. So before you reach out to any potential lenders, make sure that you’ve done everything in your power to make it work on your own. Once you’ve done that and failed, then start looking into alternative funding methods.