No small business owner wants their enterprise to remain static. If a business doesn’t achieve organic growth, it will likely stall and die. In most cases, to achieve its growth potential, a business needs to tap into some kind of finance. This could be anything from an overdraft facility to a business loan. In this post, we are going to examine what your options are.
Use an Overdraft
If you don’t need much money, tapping into an overdraft is the quickest way of securing funding. However, be aware that overdrafts can be expensive, especially if you go overdrawn on your business account without permission. Don’t make this mistake. If you think you might need some money to fund short-term growth, have a chat with your small business bank manager or speak to an expert like Deluxe Financial.
Credit cards are useful for smaller purchases. The nature of a credit card means you can take advantage of up to 60 days interest-free credit. So, if you need to purchase some stock to take advantage of an uptick in demand for a specific product, pop the purchase on a credit card. It’s faster than negotiating a credit account with a supplier. Sensible use of a credit card will also boost your business credit rating, which is handy if you decide to take out a loan.
Small Business Loan
Business loans are useful when you need more money. The US Small Business Administration (SBA) works with lenders to put small businesses in touch with a lender that can offer them the finance they need to grow the business. If you need a business loan, this is the best place to start, especially if you are a startup or you don’t have an established credit rating.
An angel investor is an expert businessman or woman. They provide funding and expertise to small businesses in return for a share in the business. It isn’t easy impressing an angel investor. You need to persuade them that your ideas are sound, and their money is safe. Consider whether you would invest in your business idea. If the answer is ‘no’, don’t expect anyone else to.
Crowdfunding is an exciting new way to access business finance. There are many different crowdfunding websites aimed at different niches. Kickstarter and Indigogo are two of the best-known sites, but there are more. You really have nothing to lose when you pitch for money on a crowdfunding site. If your proposal is sound, people will give you the money. In return, they get a product or a share in the business. Launching a crowdfunding campaign is ideal for startups, but it can work for any small business in a growth stage.
If none of these ideas work or you, consider asking a relative or close friend to help you out. Obviously, if you need $40k or more, this might be a big ask, but for smaller sums, it may work. Just make sure you draw up an official agreement if you borrow money from someone you know.