Whether you’ve been in the small business space for a while or considering starting your own business this year, you may find that funding is a major roadblock on your journey to growth and success.
For those who want to start their own company but don’t have the means to get everything up and running with their own money, there are a wealth of options available to you.
The same goes for experienced small business owners who are looking to grow their business, whether you are looking to start a marketing campaign, hire employees, or more.
From consulting businesses to photography studios, retail spaces, and service providers, each of these organizations has different goals for their business’ future.
No matter what you have envisioned for your organization, finding a small business financing option that best suits your needs can be challenging, simply because there are so many options to choose from.
Read on to learn how to take your business to the next level as soon as possible.
Regardless of your need for funding, having a growth plan in place is necessary before you apply for any monetary assistance. Start with a business growth strategy by taking the time to decide on benchmarks and end goals for your business.
Do you want to build your customer base? Or offer new products or services to your existing customers? Maybe you want to open a second location or multiple locations where your business operates. Any and all of these goals should be decided first and broken down into small actionable steps before seeking outside financing.
Once your goals are determined, here are a few of the many small business financing options available to business owners:
A simple option best suited for those just getting started with their small business is crowd funding. In its most basic form, crowdfunding is a way of gathering donations from a number of people. For someone looking to start a small business, this could look a number of ways.
For example, you could begin by giving out free samples of your product to friends and family to help get people interested in your business offerings. Eventually, you will find more and more interest in your offering among people who may even feel inclined to donate money to you to help your business grow and stand on its own.
Additionally, you could seek crowdfunding from investors in your business who believe in your product or serving and want to financially support you in your endeavor.
Crowdfunding could also take the form of selling your products out of your own home for a while, keeping costs low, and using any generated income to save for the leap to an independent small business that you can rely on for a steady income. This method of small business financing can also help you grow your customer base and increase your bottom line.
For those who have an established business but need help with providing some of the basics of business operation, a small business administration loan may be a strong contender.
An SBA loan is especially useful for any essentials you need to run your business, such as office furniture and supplies, purchasing inventory, or working capital for any other general business needs you have. If you find that you qualify for this type of loan, this could be a great option for making the transition from running your business out of your home to a separate office/business space. If you find that you are making enough profit to expand your business but struggle to afford the smaller everyday necessities, an SBA loan can help.
While the limits with this type of loan are much tighter than with some other loan options, the benefits of this loan are that it may be repaid by the government if you default on it and interest rates are far lower than other bank loans.
Once your business has been in operation for a year or more, you will find that your business needs are different from those of a brand new business owner. After a year of success, your goals will likely shift to a growth mindset in which you seek to expand your business in some way.
This can be accomplished with a business line of credit to support your financial needs while growing your business. This option is unique in that it is not a loan, but rather a line of credit meant to be used for larger, unexpected purchases as you would a credit card. You only have to pay back what you spend instead of a lump sum loan amount, and you can use the line of credit for anything your business needs, from supplementing payroll, to repairing damages or purchasing office equipment.
In some circumstances, small business grants may be available depending on specific qualifications. For example, sometimes money is allocated to support minority groups trying to start their own business. If you find that you qualify for one of these groups, a grant is a fantastic way to obtain free funding for your business. The best part is that grants do not require repayment, so you will not accumulate any debt or interest as you start or grow your business. This option can help you get a leg up on your business goals.
If you have a specific need for an office space or place of operation for your business, a commercial real estate loan is a great option for securing a commercial space. Commercial real estate loans have different terms than a typical personal or home loan, requiring a larger down payment and the option for a much shorter repayment period if you so choose.
Depending on the capital you have to work with, purchasing commercial real estate may not be a possibility until you’ve been in business for a few years. When you decide to take the leap and move your business to a commercial space, you should expect to have sufficient capital on hand, be able to prove your good credit, and know for certain you will be able to make your monthly payments without breaking the bank.
Remember, an office or business space is meant to help you grow your business and generate increased income, so be sure your business status and projections are aligned. No matter what your goals are for your business this year, take the time to find the small business financing option that is best for you.