In a survey conducted by the National Small Business Association, about 27 percent of businesses said that they were not able to obtain the funding they needed. This is a critical problem that could threaten entrepreneurship and ultimately the economy. Presently, there are many ways to secure funding for your business, but you need to know your options in order to make the right choice. Here are a number of funding options that are popular among today’s entrepreneurs.
Banks are known for their high business loan rejection rates, and this has caused many business owners to turn to alternative lending sources. However, some businesses are still trying to secure financing from national and local banks, mainly because banks usually offer better terms. Then again, the arduous process of getting a bank business loan often exceeds the time-to-credit required to meet the needs of small businesses.
If you fail to get a business loan from a bank, borrowing from an alternative lender can be a good option. Alternative lenders offer small and flexible loans through quick online applications and transfer processes. If you have a good credit score, you can have your loan application approved within minutes and get your money in one or two days. Nonetheless, you have to be prepared to pay higher interest rates if you opt for this type of financing.
Bootstrapping means using your own money to fund your business. It is the easiest funding method, but it involves substantial risk. While you have complete control of your finances, you may experience personal financial problems if your business fails. If you do not have enough personal funds, you may want to consider getting a personal or payday loan.
Another way to secure funding for your business is to raise capital with the help of venture capitalists and angel investors. However, as recognized by companies such as moneybanker.com, this method usually only works for businesses that are experiencing high growth or have proven track records or substantial revenues. In addition, crowd-funding can be a great option if you wish to raise funds without having to pitch to investors. It has helped some entrepreneurs raise tens or hundreds of thousands of dollars in a matter of weeks.
A certain funding option that works for one entrepreneur may not be suitable for another. As such, it is important that you have a good understanding of your own situation before you choose a funding method.