Credit & Loan Options for Small Businesses
Successful small businesses need credit to grow. Struggling small businesses need credit to survive. Here are five sources of funding that don’t require selling equity, pulling cash out of pocket, or begging from friends and family.
Small Business Administration
Subsidized by the federal government, SBA Loans frequently tend to be the lowest cost, lowest requirements, and longest term. Difficulties include the mass of paperwork and a slow process. Requirements at least three years of financial projections, a business plan, and evidence of competence.
You can find help from the SBA itself or the lending banks. Be aware that not all lending banks approach SBA loans in the same way. Plan on some shopping around.
Conventional Bank Loans
Without federal subsidization, conventional bank loans are more difficult and more expensive. They are also quicker to obtain and more flexible in their terms. Banks discriminate more when they are shouldering the risk, so your pitch will need to be polished.
Since each bank will make their own decision using their own criteria, rejection at one (or several) banks need not prompt despair. Learn from each failure. Success only requires one approval.
Credit Cards
Credit cards come in two varieties: business and personal. Remember that you can use either; personal credit cards just require the extra step of itemizing the expenses. The extra hassle may cost less than interest saved since personal credit cards sometimes have better terms.
Lines of credit can be overused. Planning should be done as carefully for a line of credit purchase as it is done for a loan.
Product Presales
Selling your products before you make them is called crowdfunding when it is done online, but you can presell your products offline too. You’ll need a compelling idea. Presales are most effective when the product is unique enough to not exist elsewhere.
Online Lenders
If fast cash is what you need, consider searching online. Online business lenders allow for an application that takes an hour and funds can be deposited in only a few days. Check the terms carefully, but online lending is growing in respectability.
Next Steps
Funding is hard. Hiring a CFO can help. To avoid needing funding just for his salary, we recommend considering a part-time or even temporary option. Please speak to us about your options.
We look forward to finding funding for you.
