If you are the owner of a small business, you have at one point or another found yourself looking for small business funding. While acquiring this much-needed funding can turn out to be a wild goose chase, this doesn’t have to be the case.
The following are a few things you need to know to make the search for funding a little easier.
1. A solid business plan goes a long way
Before any lender seriously considers lending you some money for your small business, the business plan must be as convincing as possible. This includes financial details such as income statements, cash flow projects and a balance sheet.
2. There has to be something in it for the lender
Don’t approach any lending institution and expect to get funding without offering anything in return. While a percentage interest rate is pretty standard, angel investors might want to stick their fingers deeper into your pie, demanding an ownership or managerial stake in your business.
It is therefore important to know what is best for your business and which type of lender you are trying to attract.
3.Think beyond bank loans
Banks and credit unions are among the most popular sources of small business funding and while that might be a good place to start, it doesn’t mean you should toss away your dream when your loan request is declined.
Online lending, angel investors, crowdfunding and merchant cash advances are only a few options at a new business owner’s disposal.
For instance, merchant cash lenders like First American Merchant will offer you the amount of money you need for your business in exchange for an agreed-upon percentage of your future sales. This will give you the ability to concentrate on your business, rather than worry about operating capital.
4. Bank on small business grants at your own risk
A good government grant can do wonders to your startup, but they are not easy to come by. Additionally, most of the grants around target specific groups, activities or even areas of the country.
There are also very limited “no-strings-attached” small business plans and as such, it is advisable to not bank on anyone giving you money for your business.
Funding a startup is definitely no easy endeavor, and the ever-growing hoard of lending options doesn’t help things either. Regardless, keeping these things in mind will go a long way to helping you take the right financial step for your new business.