25 Ways To Finance A Small Business

Finance a Small Business

 finance a small business

Are you having a hard time securing the financing you need for your startup or growing business?

I know it can be very difficult especially if you’re not familiar with all the options that are available.

So to help you in your search here are twenty five ways you can finance your business:

  1. Angel Investor Networks –With over 250,000 active angels in the country consider an angel investor network to raise capital for your business.
  2. Asset Based Financing – If you’re business has collateral like equipment or real estate that it can be used to secure financing.
  3. Bank Loans – Large financial institutions have no room to play with during the underwriting process so you may want to consider a community bank or credit union.  
  4. Business Credit Cards – An easy way to access cash for business expenses but be careful carrying a balance because the interest can cost you a pretty penny.
  5. Business Charge Cards – This is a cash source that has all the convenience of a business credit card without the costly interest.
  6. Credit Cards – Similar to business credit cards but one major difference is the impact to your personal credit scores. Business debts that report to your personal credit reports may severely impact your chances for obtaining financing for your personal needs.
  7. Crowd Funding – Crowd funding is a great option if you have an invention or tangible product to bring to the market.
  8. Equipment Leasing – Leasing equipment allows you to purchase or borrow new equipment that your business may need with 100% financing.
  9. Factoring – A way to free up cash is to sell your accounts receivables to a company (known as a factor) at a discount. The company that purchases your receivables then assumes the responsibility for collecting it.  
  10. Friends and Family – This is an obvious way to get help when you start a small business but consider structuring it as a formal loan to make the process even easier for your friends and family.
  11. Grants –Check to see if your business qualifies at the Grants.gov web site.
  12. Home Equity – Borrowing against the equity in your home is much easier than qualifying for a traditional business loan because you don’t have to supply a business plan, financials, and other corporate documents. You can also extend the repayment period for up to 30 years at a much better rate than a small business loan. However, there is risk involved with putting your personal assets at risk so keep that in mind.
  13. Insurance – Borrowing against the cash value of a Whole Life Insurance policy is another risky way to get the financing you need but it’s an option worth mentioning.
  14. Letters of Credit – A letter of credit can be a great tool for handling payment transactions overseas when dealing with foreign clients.
  15. Line of Credit – A line of credit works like a credit card but has lower rates and higher credit limits.
  16. Merchant Cash Advance – This allows you to borrow a lump sum of cash up front depending on the amount of your monthly credit card sales.
  17. Merchant Line of Credit – If you process monthly credit card transactions then you may qualify for a merchant card. No personal credit checks or collateral required so it’s definitely a source worth looking into.
  18. Microfinance Loans – If you only require $50k or less then this may be just what you need and approvals can take as little as 14 days to fund.
  19. Purchase Order Financing – Fulfilling a large order from a buyer can deplete your cash reserves because you have to pay your suppliers. This option allows you to secure financing to fulfill your order without relying on your company’s cash.
  20. P2P Loans – P2P Loans allows lending to take place directly between you and another individual. It can be a much faster and easier route then dealing with your bank.
  21. Retirement Funds –While this can be a risky option it can prove to be a viable strategy until you can find alternative funding for your business.
  22. SBA Loans – There are many SBA loan programs available so take the time to familiarize yourself with them so you can decide if this is the direction you want to go.
  23. Social Lending – Social lending provides you the opportunity to borrow money from individual investors. Two of the most popular social lending sites are LendingClub.com and Prosper.com.
  24. Trade Credit – Trade credit is the single largest form of financing from business to business and is a great way to conserve your company’s cash flow.
  25. Venture Capitalists – While this source of financing isn’t for everyone it can be an excellent option if you have a high-growth company.

What other ways do you suggest to finance a small business?

Looking for more ways to finance your business? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

About the author

Marco CarbajoMarco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Comments

  1. Phillip G. says

    Thanks for the list here Marco! This will come in handy with my clients and thanks for the resource the other day too!

  2. says

    One particular type of SBA loan that small business owners should consider is the SBA CAPLine loan. This money is lent to small businesses that are secured by the company’s assets, such as real estate, accounts receivable, inventory or equipment. They’re a great option for companies that have less than perfect credit.