Small businesses begin with the visions of entrepreneurs. However, to see those visions through to reality, some sort of funding is necessary. Here are some creative financing options for entrepreneurs who are considering how to fund their businesses.
Obtain a Traditional Bank Loan or Line of Credit
Small businesses in need of funding can approach banks or credit unions for loans or lines of credit. If your company is not yet well established, you may have to guarantee the loan personally. It is worthwhile to look into whether your business qualifies for a U.S. Small Business Administration loan. The SBA makes it easier for businesses to obtain funding from lenders by guaranteeing a large portion of the amount of the loan.
Fund the Business on Your Own
Numerous small businesses are funded by the owner’s own capital. This has the advantage of allowing the owner to remain free of the influence of outside investors and retain complete control.
Get Help from Family and Friends
Entrepreneurs often turn to family and friends when they are unable to fully finance their companies by themselves. The funding is often given in exchange for equity in the business. Even if you are dealing with family members and friends, though, be sure that contracts are drawn up that stipulate the details of the financial agreement.
Use Credit Cards
Credit cards can be extremely useful tools for creative financing when business owners need short-term boosts to their cash flow. However, they do not provide effective solutions to long-term financial challenges.
Work with Angel Investors
Angel investors are individuals who are interested in providing capital to businesses they perceive as having exceptional potential. The downside of working with angel investors is that they will want an equity stake in your business, a place on the board of directors, and a voice in the company’s management.
For more advice on creative financing solutions for your small business, get in touch with Jasema Capital.