There are many sources who offer business funding today. Knowing these can help you find the best funding options for your business.
Business Charge and Credit Cards are a fast and
easy way to access cash for business. You can use the money for any purpose. Many merchants will approve you for individual credit cards of $10,000 or higher.
Angel investors fund over 30,000 small businesses every year. With over 250,000 active angels in the country, you may want to consider an angel investor network to simplify your search. These investors are a great source of funding when banks won’t approve you. And they are perfect for projects where you need a lot of money. Try sites like www.angelinvestmentnetwork.us or www.funded.com to connect with interested investors.
Asset Based Funding is perfect if your company has collateral like accounts receivable, inventory, equipment, purchase orders, or real estate. You can use these assets to get the money you need. And you can secure asset-based funding even if your credit isn’t very good.
Bank Loans are still available, although they have become harder to get approval for. Many large banks tend to be much more conservative in lending. So, you may want to consider a community bank or credit union for an SBA loan.
Equipment Leasing helps when you want to lease expensive equipment. Sometimes, you can borrow against existing equipment you already own.
Factoring is perfect if you have high amounts of account receivables. You can get funding up to $25 million and you can receive your advance within 24 – 48 hours in most cases. With factoring, you sell your company’s accounts receivables to a company (known as a factor) at a discount. This is to free up your cash. The company that purchases the receivables then assumes the responsibility for collecting them. This is a great option as they don’t care about your own personal credit.
Grants are a great way to get money for your business, in particular government grants. Depending on your business type and intended use of funds, there are many options available. And you don’t need to pay grant money back. Search for federal grants at www.grants.gov and www.grantwatch.com and make sure to also check state and city websites as they may have other options for grants.
Lines of Credit are perfect sources of working capital. They like a revolving credit card. But they have much lower interest rates and higher available credit limits. You can get credit lines over $150,000. You can write checks from the account or use a debit card to withdraw funds or use for purchases.
Merchant Cash Advances and Merchant Lines of Credit work for businesses that process credit card payments. This type of financing will advance you money against future credit card transactions. You can even get a debit card to use the funds you get.
Microfinance Loans are easier and time-intensive to qualify for with. They have loan amounts ranging from $500 to $35k. Many businesses use several micro loans to get money for their business. This is versus applying for one larger loan due to easier qualifying criteria.
SBA-backed loans are still one of the most popular financing options available today. SBA backs or insures about 80% of the loan while the lender lending the money takes on about 20% or so of the risk. Due to the lower risk to the bank, many major banks are more apt to lend money using SBA backed loans than regular loans.
Venture capital is neither easy nor fast to tap into but can be a viable source of funding. This is a great source when you need higher loan amounts, and don’t mind giving up a potential stake in your company. Plus, you don’t have some of the headaches that come with conventional funding. Check https://nvca.org for names.
It’s always easiest to get financing when you know what you are looking for. Now you know some of the many financing options available to small business owners today.
About the Author
Mark the President of Commercial Credit Access (“MyCCA”).
Mr. Sheehan spent the last 22+ years working in the equipment finance business helping SMB’s obtain financing to grow their business. He has worked in a variety of positions for banks and independent finance companies. Mark brings a unique wealth of credit and lending knowledge to help his customers improve their business credit and obtain financing.
Mr. Sheehan is the driving force behind the release of Commercial Credit Access powered by Fundability (“MyCCA Fundability”). MyCCA Fundability is the leading business cash and credit access system in the world today.
