Obtaining financing to start or develop a business is one of the main challenges that small businesses face. The lack of banking products for startups makes it difficult to obtain loans, which is why entrepreneurs use credit cards to invest in their businesses, but we know that they are not intended for that. Have you faced this kind of situation?
Using personal credit cards for companies is not the most appropriate strategy. These resources are designed to be used in small purchases, the lines of credit at the beginning are low and they also have high interest rates. At some point, these reasons will make it difficult to pay on time, especially in the early stages of business when they are not yet generating a profit.
Fortunately, in addition to credit cards, there are other and better small business financing options that you can take advantage of. Here below, we list the 5 most effective ways to obtain financing for your business.
It is one of the most common alternatives for small business financing. It consists of starting the venture with your own money, generally it is for small investments. The growth of your business may be slower due to the lack of capital to buy supplies, machinery or design a marketing strategy, for example. But it offers a big advantage, you don’t have to report the numbers to anyone.
It is a collective financing tool, there are currently multiple platforms dedicated to raising money for mainly artistic, social and business projects. The challenge is to get people interested in your project, consider that you will have to give a reward in exchange for donations.
This option is the one that offers the most advantages because they have products tailored to your business objectives and payment possibilities. For example, Camino Financial works with a pre-approval process with a 24-hour response and specializes in small business financing, making it easy to qualify.
Accessing small business financing is not always easy, business angels are a good option to inject capital into startups and that’s not all, they also bring their experience and knowledge for the development of small businesses. These angels use their own money and it is their decision to invest, based on future plans, so they only invest in great ideas. It is really like finding a gold mine for a company, unfortunately, there is not one in every corner.
Venture capital is a short-term, temporary small business financing tool. The investments are controlled by a Private Capital Fund and are granted to startups with high possibilities for growth and expansion, and they also require a high rate of return on investment.
Before choosing any of the above options, consider the benefits and drawbacks of each. You have to take into account the offer and the value it will bring to your business, in addition to the monetary one. The first step is to explore your direct possibilities such as personal savings or loans for friends and family, select options that you think are reliable.
Also consider the possibility of approaching government programs or capital grants, these operate on the basis of non-reimbursable grants. These contributions can be given as financing or in specific benefits.
If you choose to add investors in any of the options mentioned, remember that you must commit to achieving the objectives you set so that your company does not disappoint them. Accessing small business financing can make the difference between success and failure.
In the US, 25% of businesses closed due to cash flow of money, according to the US Small Business Administration (SBA). Do not be part of these statistics. Share with us what are your main financing alternatives.