Small Business Funding: Resources to Grow Your Business
In the early 2000s, financial institutions were practically giving money away to anyone who started a business. After the financial crisis in 2008-2009, they began to reconsider their practices. For small businesses now, it’s much more difficult to secure the funding needed to be truly successful. Banks require more proof of potential income. They want to see a very specific business plan before they even consider small business funding, let alone close the deal. As a small business owner or entrepreneur, this could make your life a little more difficult, but there’s no reason to worry about it. The following are some things you can do to grow your business with the right resources.
Try for a Bank Loan
Just because it’s difficult, doesn’t mean it’s impossible. If you want to start by going to the bank, then do it! Before you sit down with a loan officer, make sure your business plan is solid. Include in your plan exactly how you are going to run the business, turn a profit, hire employees and pay off the loan.
Of course, you may not have this information right off, but the more time you take to be specific in your plan, the more likely a bank will be willing to look at you and consider you for the loan. You may want to sit down with an accountant to go over your projected income and business expenses to ensure everything lines up just perfectly.
Whether you are denied small business funding at a bank or simply aren’t committed to it, there are some ways you can get creative with resources that will grow your business. You won’t have to sell your right arm or anything, but with the challenges that often arise in business, it could be a huge benefit to have funding that comes from somewhere other than a typical SBA loan. For example:
1.Family and Friends ï While this could be a recipe for disaster when it comes to your personal relationship with your family and friends, it could also really be the stepping stone you need for commercial growth. You have to consider the relationship you have with each person to ensure you are completely comfortable going to them for money. It’s definitely a matter of trust that you won’t let money destroy a friendship or family bond. Just as you would with a bank, present your loved one with your business plan. Those who are close to you are more likely to believe in what you’re doing and could be more likely to loan you the money. If they can’t give you the full amount, you could likely get a bank loan on top of it, using the money from your loved one as a down payment. Treat the loan just as you would any other type of small business funding. Be on time with your payments. If you have the funds available, pay it back early. By all means, if you’re at a family party, don’t consider it an opportunity to discuss business, because it could get ugly for everyone there!
2.Grants ï For some small businesses, there are grants available. It doesn’t hurt to apply for one. Worst case scenario is that you don’t receive it, which simply puts you right back where you already are. The SBA offers some for scientific and research-based businesses. There are some specific requirements, so be sure to check those out. Other fields and industries may also have some grants you could look into. There’s nothing wrong with free, no-obligation money, right
3.Angel Investors ï Commonly found through initial friends and family funding, an angel investor is often a very proficient option. Small business funding from a business angel allows you the capital you need, but it’s always in exchange for something. The individual may require ownership equity or convertible debt, which becomes a benefit to them in the long run. With this type of funding, you need to make sure you always act in the best interest of every owner. As an angel investor, they are part-owner in your company. After you have the money paid back and don’t need to rely on the investor anymore, you can work to buy them out.
Start Business Growth Today
Small business funding doesn’t have to be typical. Get creative and find a way that works for you. Whether you are denied a bank loan or simply don’t want to deal with it, there are other ways that will help you grow your business financially. To learn more about bettering your business, check out some of the other tools and articles on Mighty Recruiter.