One of the biggest impediments to starting any small business is obtaining the financing necessary to get it off of the ground. Thankfully, as a result of modern technology, there are many options that can help someone get the financing they need. Here’s an overview of some of these options.
Personal Funds, Friends and Family
More often than not, a person will turn to their personal funds, friends, or family in order to obtain the financing they need. These obviously have many advantages: Dipping into your own funds is easy to do, and many creditors will require that someone put their own funds into a project before lending any additional money. If you are fortunate enough to have friends and family that have the resources you need, this can be a relatively easy thing to do. Of course, there are disadvantages: You can strain relationships, owe dear friends thousands of dollars, and potentially go into business with people you care about – something that doesn’t always work out well!
Crowd Funding is a relatively new phenomenon. Using an online platform like Kickstarter, an individual can solicit funds for a specific goal or project. Generally speaking, no money changes hands until the financial goal has been met.
Kickstarter and other crowd funding campaigns have become all the rage lately. Using these programs, small business owners can raise money for their business. In exchange, they can give away a variety of prizes or rewards in exchange for a donation. In the case of a small business, this can include things like merchandise, discounts, or other physical rewards. If structured properly, a crowd funding campaign could be used to sell shares of a business, although there may be legal complications associated with this method.
If you are wondering, “What are SBA Loans?” there are many websites that you can check out. As noted by Lantern Credit, “An SBA loan is one guaranteed by the Small Business Administration (SBA) and offered by approved lenders such as banks, micro-lending institutions, and private lending companies.”
The SBA – or Small Business Association – does not actually loan out the money themselves. Instead, they offer up a guarantee on a loan ensuring that a lending institution will get their money back if a business goes bankrupt and can no longer repay the money they borrowed. This reduces the risk associated with the loan, and helps to free up cash and credit for a borrower.
As is common with many governmental programs, these loans are not the easiest to obtain, and you may need to consult a financial planner or agency for help in getting one. That being said, SBA Loans can help you get the money that you wouldn’t have access to otherwise.
Fortunately for small business owners, the above options barely even scratch the surface of what is available to you. For additional information, speak with a financial expert, and make sure to do your research into the type of financing programs that are best for you.