If you are starting a small business or expanding an established business, your first step will likely be securing small business funding. Attaining business funding can be tricky. Following the advice below will help you will find the right types of business funding. There are several ways to get small business funding, but not every way is ideal for every company.
One of the biggest misconceptions about small business funding is that you can get a grant from the government to start your business. You cannot. You may be able to get some type of loan, but in most cases you must go through another source in order to get business funding. Typical loans are the most common source for small business funding. In most cases this type of business funding will be secured through a bank or other financial institution. Though it is possible to borrow money from a private party or angel investor, these situations are not common.
Typical loans may not be the best approach for your small business funding needs. Those with bad credit, for example, may not be able to get a loan at all or, if they can, the interest rate may be too high. These loans may be impractical as a primary source of business funding. If you are unable to get a loan to serve as your small business funding, you may want to secure a line of credit. Usually these are a bit easier to qualify for, but the amount of credit you can obtain will not be as much as a traditional small business funding loan. A credit card is another business funding method. It can be used to purchase supplies and materials. However, for higher value items such as heavy equipment, credit card limits are likely to be insufficient to replace traditional business funding methods.
As mentioned above, angel investors can also be an option to secure small business funding. An angel investor is a person or company with the capital to provide business funding. In most cases, angel investors will only consider high-growth businesses where small business funding is not practical.
If none of these options work for you, you can try a peer to peer (person to person) lending site for small business funding. This is usually a last resort option for business funding as you can never be sure what you are getting. You might have a good experience, but there is no guarantee. Be very cautious about the site you are using to explore your small business funding needs.