A tight financial situation may spark innovative ideas and new ways of financing your business. When you are considering your options for financing your business, keep these things in mind. While equity investment is the preferred method for venture-backed companies, debt financing is available for small businesses, too. While the latter may seem to be an attractive option, it often involves giving up control and income. There are other ways to secure funding. Here are some of the most popular methods.
Short-term loans have repayment terms of a few months to one year, so they’re best if you need fast returns on your investment. While approval times can be short, the trade-off is often a higher interest rate. Long-term loans, on the other hand, have repayment terms that can last for several years. The downsides of these types of loans are long approval times and strict credit requirements. But if your credit score is strong enough, you’ll have a better chance of obtaining a loan.
Banks and credit unions are another way to access funding for your small business. Traditional banks are typically better suited for bigger, more established businesses. You have a better chance of receiving funding from a traditional bank if your loan is SBA backed. Online lenders don’t have physical branches, but they offer fast online application processes. These options aren’t suitable for every business, but they can offer you the funding you need.
Traditional banks may not be the best option for small businesses. While traditional banks may not be able to offer you a loan, they can help you evaluate your options for financing your business. To find the best bank, contact your current bank. To find a bank in your area, search for local banks. You’ll find that these banks are willing to work with small businesses. But remember to keep your business credit score in mind to avoid overextending yourself.
The SBA and community banks are a good resource for small-business financing. Small community banks often have a keen interest in the economic development of their area. In fact, in a recent survey, independent community banks accounted for more than 60 percent of the total Paycheck Protection Program loan amount, with most loans going to minority, women, and veteran-owned businesses. In addition to community banks, big-name banks such as Bank of America, Chase, and Wells Fargo also offer a wide range of business funding options.
A small business loan broker can help you get the money you need for your business. These professionals deal with several lenders to provide you with the best financing option. Generally, the costs of borrowing will be higher, with some annual percentage rates as high as 100 percent. You should carefully evaluate the qualifications and characteristics of each bank before deciding on the right loan option. In terms of term loans, Credibility Capital and Funding Circle are excellent options. For a line of credit, Bluevine and OnDeck offer competitive products.