Financing Options for a First Time Business Owner
23 May, 2016 / Comments: Comments Off on Financing Options for a First Time Business Owner / By William Mahnic
Traditional loans can be hard to obtain when you are a first-time business owner. Without excessive capital and a credit history as a business, not many banks are going to offer a large number of business loans to get you started. Luckily, there are several other options available out there to help you get the money you need to get your business up and running.
Check with the SBA
The SBA (Small Business Administration) is a great place to start your search for a small business loan. They offer a variety of programs to meet the needs of business owners. In order to get a good handle on what types of loans are available to you, start by creating your business plan. With this in place, you can talk to an SBA representative about the various financing options available including loans that the SBA guarantees, which makes it easier for banks to lend to you with the risk of default taken off of their shoulders.
Private Company Lending
Sometimes your funding can come from the least likely places. Banks are not the only entities offering the capital potential small business owners require; private companies are quickly jumping into the game because it provides them with a quick profit. You can find a variety of terms and loan amounts, depending on what you need. Shop around with different private companies to see who will offer you the terms necessary to get your business off the ground. A few examples of what may be offered to you include daily payments based on a specific percentage of your sales; monthly payments as would occur with a standard loan; and periodic payments based on the time periods the lender requires.
Do not discount the value of crowdfunding to get your business up and running. Even though it seems like everyone has some type of crowdfunding request going, small businesses are often the recipient of large amounts of money this way. There are several ways you can use crowdfunding: you can strictly ask for money to get your business started, giving details on the product/service and what it offers or you can offer an incentive/reward to those that invest in your business. Either way, the good news is that you do not have to pay crowdfunding money back, so it is a great way to get yourself started.
Sell the Excitement
It is even possible to start making money on your products before they are ready for selling. If you are a marketing guru, you can gain excitement in your product and accept preorders. The money you make on the preorders can then be used to create the products. You can continue this cycle until you have enough capital to pay for the inventory and supplies necessary to make products and sell them in the standard fashion. Something important to consider before choosing this option, however, is to ensure that you are able to make good on the preorders. It is best not to promise a product that you cannot deliver or allow yourself to get in over your head with orders that you will not be able to deliver on time as that would backfire on your desire to get up and running and be well-known throughout the community.
Don’t Forget Friends and Family
One of the most common places to get the money you need to start up a business, yet the one that most people do not want to talk about is friends and family. It can seem like an imposition to ask those that you love most to help you fund your business, but oftentimes they are your biggest cheerleaders. Even if you only obtain a little bit of money from each person, it all adds up. Before you know it, you will have some capital to get started, even if it means you have to combine this method with another method, such as accepting preorders.
Getting money to start your business requires a little creativity and desire. You have to be willing to put yourself out there to determine what funding options are available to you. What is the worst thing someone could say to you? If they say no, you can always try another avenue until you find what will work for you and your business plans.