Viable Options for a Funding Source for Small Business Ventures
People who are just starting out in business and those that have growth plans both have one thing in common which is the need for financing. If you are in this group, then you will appreciate how difficult it is for small businesses to acquire finance sometimes. This is especially true for the traditional lenders of first resort who have stringent loan application and approval conditions that are not favorable for small establishments. This is attributed to the high failure rate that characterizes small businesses an investment in which banks sometimes consider as being too risky.
There is however alternative funding sources for small business that you can pursue outside the domain of banks. Some of them are:
• Personal savings
• Government guaranteed loans
• Finance companies
• Family and friends
• Angel investors
You will seldom find 100% funding for your business from lenders. It is an established trend that the first and crucial capital for your business will come from yourself. Getting a loan from yourself will gift you with the advantage of having absolute control and ownership of the business which makes the day to day running and decision making quite easy. The risk of doing this emanates from violating the rule of business financing that calls for the separation of personal finances from that of the business. In the vent that your business does not work out as planned, your personal fortunes will go down with the business.
Family and Friends
You can obtain financing from family and friends as most of them will possess intimate details of your plans. The benefit of doing this is that they will not seek a controlling stake in your business and the loans are usually extended at low or no interest at all. The risk comes when your venture collapses or you experience obstacles in repaying the money as you will effectively alienate your friends and family.
Finance houses are a good and reliable funding source for small businesses. They can offer loans under various facilities such as:
• Small business factoring
• Bad credit loans
This method has the advantage of making instant cash available to you while saving you from the rigors of debt collection. The downside of this source of financing comes when you deal with a rogue factor that will harass your clients with their uncouth collection methods that result in your loss of business.
You can also pursue other avenues such as angel investors who are basically people looking for a good return on their cash. Government guaranteed loans, grants etc. can also be a good source of financing for your needs. You can explore these financiers online to find the best one or blend suited for your capital requirements.