Are you looking for how to get funding for business? Well, almost all the entrepreneur has to face this challenge. 98% of successful business owners have to take out business loans in order to grow and survive. Even if you are still on planning stages, you will need a loan to start a business. Hence, it is important that you consider different avenues of getting funding if you want to start a small business or take your business to the next level.
You can never be completely prepared for business. At a point, you will need money to keep the business on the right path. Fortunately, you can secure the funding you need from different avenues. In this article, we have compiled a guide on how to get a small business loan:
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1. Personal Savings
When it comes to funding a business, the first thing you should consider is your personal savings. You need to have money in the bank, lots of it. If you plan to start a business in the future, you can begin on time to save in order to get part of the money you will need to start your business. This is perhaps, the best way to start as you will not be indebted to anyone. However, it usually takes a lot of time to save the kind of money you will need to start except if your business does not require much investment.
2. Family and Friends
Family and friends is another avenue to get a small business loan. The members of your family and some of your friends may be interested in investing in your new business. This is another great option. They will normally give you an interest-free loan or a loan to pay back with a very small interest rate.
3. Bank Loan
A bank is the most popular option to secure funding for a business. Unfortunately, you will need to have a good credit score, collateral, and ability to pay their often huge interest rate before you can secure a loan. However, most banks can offer you up to 70% of the money you need to start your new business; you can make up the remaining balance with your personal savings.
4. Keep Your Day Job
Don't be so quick to quit your regular job if you are not sure how to get the money you need for your business. Recently, more and more entrepreneurs are starting a business while continuing to work part-time or even full-time in some cases. You can use your income from your regular job to fund your business. Moreover, you will have something to fall back to if your new business does not perform as expected.
5. Peer-to-Peer Lending
Peer-to-Peer lending is becoming popular in recent years. In fact, it is one of the easiest ways to get business loans online. You can find these mutual groups online. It involves making a contribution per month and then the contribution is given to a member of the group to pay back with some interest or even interest-free after few months.
6. Government Loan Programs for Small Business
In the United States, the SBA is often one of the first places to get small business loans. SBA can give you up to 50% of the money you need to start your business. There are also other government loan programs that will help you get the funding you need. If you are not in the United States, you can check for government loan program for small businesses in your country. If you qualify for this program, it will help you to start your own business or take it to the next level.
If you are looking to get a business loan online, crowdfunding is one great avenue to accomplish that. It involves pitching your idea to a group of small investors through the Internet. If they like your idea, you will have hundreds or even thousands of people contributing money for you. Some of the crowdfunding sites you can use include Kickstarter.com and Indiegogo.com. However, there are certain rules you have to follow and restrictions you should be aware of.
8. Angel Investors
Another great way to get a loan to start a business is by making use of angel investors. These investors are wealthy individuals looking to invest in any profitable business. In most cases, these people form an investment group in order to spread their risk and to pool research. You can always find these groups online with a little research. You can also ask your local chamber of commerce about who might be interested in funding a new venture. Note that you will need a strong business plan to convince these investors to give you the financing you need for your business.
9. Venture Capital
Venture capitalists can prove to be a great source of funding when you are seeking for a loan to start a business. These persons will provide you the money you need to start a business. However, the ultimate goal is to have a controlling share of the company in the later stages.
10. Small Business Lenders
Nowadays, there are hundreds of organizations you can find online that are interested in lending to small businesses. You can find these organizations simply by googling "Small business loans". In most cases, these organizations will give you the loan you need fast at a very high-interest rate. However, if you do a proper research, you can be able to find organizations that will charge you little interest rate or give you other options that you will find beneficial.