Are you looking for business funding options that actually work? Securing business funding is an important part of getting started, whether paying for the first batch of stock or real estate. However, some funding options have a low chance of coming to fruition, so you need to choose the right avenues for financial help.
This article shares the funding options that have consistently worked for all business types. You can use one of these funding options or a combination of all 5 to get the funding you need to ensure your business is financially healthy.
Bank Loans
Bank loans are a classic method of securing business funding that can be hard to qualify for but offers competitive terms compared with other financing options. Banks provide a variety of financial products for businesses, which includes:
- Loans
- Business lines of credit
- Equipment loans
- Commercial real estate loans
- Business credit cards
Taking advantage of these allows a business to increase the amount of resources available to start the venture. However, banks assess the legitimacy and risk of the business to ensure they can make a return. Therefore, businesses deemed lower risk will have access to the biggest bank loans.
However, you can still apply for a bank loan even if your business has a poor track record and few collateral assets. It’s important to shop around and find a bank that you find trustworthy and reliable.
Some of the biggest banks in the United States where you can get a bank loan include Wells Fargo, Bank of America, and Chase. However, you can also research smaller banks that are actively looking for new customers and can provide a great deal.
Small Business Grants
Small businesses often need funds the most to stay afloat, and grants are one of the best funding options. That’s because small business grants provide an injection of funds that promotes growth and doesn’t need to be paid back at a future date. This is ideal for startups that need every dollar they can get to succeed.
However, everyone wants free capital, so the competition to secure small business grants is fierce. You’re typically placed on a long waiting list and have to make a case for why your business deserves the money compared to others.
The type of places where you can get small business grants includes state and federal agencies, or private corporations. These are typically non-profit organizations that are built with the aim of making small businesses succeed. Also, Grants.gov is a popular website where you can start to secure funding for your small business.
Crowdfunding
Crowdfunding is an accessible business funding option with no upper limit on how much money you can secure. You might have heard of the infamous case of a video game, Star Citizen, securing a staggering half a billion dollars through crowdfunding.
You can secure crowdfunding through websites like Kickstarter, GoFundMe and Indiegogo. These are reward-based crowdfunding websites where anyone can support a venture for as little or as much as they want. In return, they might receive a reward, which might be a free sample or discounts. Equity crowdfunding websites also exist where investors get a piece of the company. Top equity-based crowdfunding websites include Republic, CircleUp and Fundable.
Are you wondering how to ask for funding on crowdfunding websites? You can start by registering an account and sharing your business idea. You need to inject personality and the business mission statement. This gives a reason for backers to choose your business over others. Also, you’ll need to share the reward for backers or the size of the equity stake for each dollar invested.
Credit Union Financing
Credit Union financing offers the same great rates as banks, but they are more receptive to small business loans. Since 2010 the number of credit union-backed businesses has doubled, so it’s a viable option.
Credit Unions also offer business credit cards, lines of credit, and traditional term loans. Therefore, it’s the funding boost many businesses need to add more commercial assets, hire new employees and increase the size of inventory orders.
Many credit unions are usually community-based, so what’s available for your business depends on a case-by-case basis. MyCreditUnion.gov is a top website for finding viable credit unions. For example, the Navy Federal Credit Union is applicable to Navy Federal Members who are looking to secure funding for their business.
Online Loans
Online loans are the best option for business owners who have a poor credit rating and cannot secure a bank loan. Another advantage is the ease and speed of applying for a loan. Therefore, it’s a good choice if you quickly need an injection of funds to cover important business costs. In fact, you can often get approved for an online loan within 24 hours of making an application.
However, online loan interest rates are usually higher than bank loans. Also, you must watch out for companies with hidden fees and misleading advertising. This can result in paying more for the service than expected.
Some of the top places to get an online loan include Credibility Capital and Funding Circle. These services are great for getting traditional term loans. Also, Bluevine, OnDeck and Fundbox are great choices for receiving a flexible line of credit.
Final Thoughts
In conclusion, there are multiple excellent channels for acquiring business funds. When looking for the best business funding routes, you need to consider the cost of borrowing. Also, consider the track record requirements and the amount of collateral needed for your desired funding.
Can’t get enough funding from a single channel? Then you should consider using multiple funding channels to ensure you get enough money to meet your needs. However, make sure you plan how to pay back the funds with interest and other fees.
