Small businesses are usually put together by people who have a great idea, but may not have the proper funding source to start up their dream. These days with the state of the economy, it can be even harder to get funding for anything, let alone a small business company. However, there are many sources that make it possible for the small business person to have that dream and some of these include:
While bank loans are hard to get these days, they are still a very traditional way to fund a small business startup. The best chance is usually through a local community bank because the big banks have slowed down on giving loans. Banks will perform a finance analysis of your company and will usually require that you have to have a good credit record, but a small town local bank is more likely to be willing to work with you to get the funding you need.
A popular type of bank loan is the asset-backed loan. This is funding based on some sort of collateral. They will cost the lender more, but work better for people who may not qualify for other types of bank loans.
Small Business Administration
SBA is another traditional source of loans for small businesses. They have helped more than 62,000 small businesses get the funding they needed for their dream as of 2011 to the tune of more than $30 billion dollars. Banks usually love to work with the SBA because that means they are protected with a government guarantee if the lender for some reason defaults on the loan. Most SBA backed loans are less than $250,000, but the number going above that has increased by more than 50 percent as of 2011.
Venture capital funding comes when a firm from the venture capital industry helps out a small business through offering them funding they need. According to 2009 statistics from Price Water House Coopers, this type of funding helped small businesses get more than $20 billion in monies.
One type of venture capital investor that helps small businesses sometimes is called Angel Investors. These are usually found through friends or other business people. They could be an individual who has money and wants to help out a new business that has done some research and believe in it. If you go this route, be sure to have a great business plan to show your potential investor.
Believe it or not credit cards are a popular way to finance a small business and are also a very common way to do it. If you have a credit card designed for a business with a high enough credit allowance, this could be a way for you to have the funding you need. Just be sure that you will be able to pay off your card with the proceeds of your business so you won’t just end up in debt.
All in all, it can be hard to start up a business and the small business person needs to sometimes think out of the box to find the funding they need. There are these and many other ways to get funding and these are just a few suggestions.