One of the most challenging areas of a growing business is finding the right funding. If your business is doing well, you will need to acquire the funds that will help you continue to expand. Or, there are times when businesses just need extra capital to help them get through a financial slump.
How can you finance your business?
There are a variety of ways to seek out money that you can put towards building your business. Before you pursue one of these options, but sure to sit down and dedicate time to figuring out what your goals are, calculating the necessary amount you will need, and, then, compare these options to find the one that would make the most sense for your specific needs.
Ask family members or friends.
Ideally, the best way to borrow money would be to seek out extra funds from family members or friends who have the financial flexibility to temporarily part with money with no affect on their personal stability. While you will eventually need to pay them back, it eliminates the weighted stress of having to follow a stricter timeline. Family members and friends will be more lenient about how quickly they are reimbursed, however, you could risk destroying personal relationships if you were to completely lose the money.
Apply for a bank loan.
This is the option that most businesses pursue, typically because it seems like the most obvious one. Depending on the type of financing you need, banks offer a wider variety of funding options. However, the approval process of acquiring a bank loan has become very strict, which means that a lot of smaller businesses won’t pass beyond the approval process.
Consider equity funding.
Obtaining money through equity funding means that you are putting forward a portion of your business in return for investment. Venture capital is one of the most common types of equity funding. This is a great way to raise capital for your growing business, but it also requires that you have planned out exactly how you are going to make a return on investment within a specified period of time.
Acquiring a Small Business Administration (SBA) loan.
These loans are available to any small business, but, to prevent everyone from applying, your business must first meet a list of qualifications. These qualifications often eliminate many small businesses from the running at the onset. If you do happen to meet the qualifications, you will still need to go through another financial institution because the SBA does not actually provide loans directly to businesses. The standards of this other institution may be even higher than the other financing options available to you.