When you have a brilliant idea that you wish to get off the ground or an existing business that requires an influx of capital to stay afloat, you require money quickly. For this reason, the chances are that you will expose yourself to risks such as paying unnecessarily high interests or wasting time waiting for an approval process that won’t bear any fruit. We have put together ways to raise capital for your small business. Each option has disadvantages as well as drawbacks so you should weigh them keenly to make the best decision for your cases.
Family and friends
The ugly truth is that getting a bank loan can prove to be a challenging task when you are starting out. For instance, most banks only lend cash to those with strong credit score or personal guarantee. For this reason, folks turn to their family and friends for quick funding. The repayment schedule and interest are set after discussing with them.
Using personal credit cards is also an option that you can consider when starting a business, particularly if you have good credit. If this option has crossed your mind before, make use of the credit cards especially those features for multiple expenses. For instance, a card with low rates preferably a zero percent introductory offer can be used for business purchases. For huge cash expenditures, you can take advantage of cards with no fees for cash advances then deposit the balance to the card that provides zero percent interest rate.
You can find many online lenders that will offer you loans. Gone are the heydays when you had to get to a bank to access loans. Online term loans are better than traditional bank loans in efficiency as well as speed. You can apply in less than ten minutes. Once all your documents have been verified the money will be deposited in your account within 24 hours.
Crowdfunding was popularized by platforms like Kickstarter as well as Indiegogo, and for the last couple of years, it has proven to be a viable funding method for those interested in starting a business. It is a great option for entrepreneurs who lack an established track record but can successfully show the viability of their venture or product. It is an option that doesn’t consider your personal or financial information.
In some cases, you will realize that the interest rate charged by banks is much lower compared to other lenders. As many businesses are not doing well, banks stay as much as possible to minimize their risks. In simple terms, this means that you will be required to provide a complete loan package including your financial statement, copies of tax returns and in some cases even a business plan. Banks can also consider funding your business with collateral as well as a personal guarantee from the owner. Check out local banks to get the most out of the cash that you borrow because they are aware of the local credit conditions.