4 Small Business Financing Options For Startups & Established Businesses

Business.com / Funding / Last Modified: February 22, 2017

Many entrepreneurs have a great business idea. What they don’t have is the capital for funding. Discover four great options here.

Many entrepreneurs have a great business idea. What they don’t have is the capital for funding.

In the beginning of a small business venture, your business’s revenue is uncertain and your credit isn’t established yet, but you need that money to invest in a facility, inventory, and your employees and hopefully turn your idea into a successful business.

There’s no universal financing method because every business has its own unique capital needs, but there are a variety of small business financing options that you should look into.

Related Article:Inside the Mind of the Bank: 4 Factors Affecting a Small Business Loan

1. Small Business Loan

Getting a small business loan is an obvious financing option. I have a business loan with Mountain America Credit Union, and unlike some who’ve had bad experiences or find the lending process frustrating, I’ve loved working with Mountain America. They offer great terms and interest rates, as well as a variety of business loans to help finance your startup or growing business.

When you’re applying for a small business loan, create an outstanding loan application, know the APR of the loan and any fees and seek out small banks since they’ll be more helpful toward aspiring small business owners. And if you’ve been rejected, pick yourself up, learn why you were rejected and apply again somewhere else using that knowledge.

2. Strategic Partnerships

This is another one I have personal experience with. I wouldn’t have my content marketing business without receiving a bit of financial help and introductions to some of our biggest clients from a strategic partner. Thanks to Ferrari Color, Stryde was born and has been able to continue growing month after month.

Strategic partnerships with the right partners give you a competitive edge, giving you access to knowledge and people and making you more efficient and credible in your industry. This mutually beneficial union will not only help you get initial funding, it’ll help increase your bottom line once you’re more established.

Related Article:Business Loan or Line of Credit? The Best Option for Your Small Business

3. Investors

If you’re looking to get financing at the startup part of your small business, the angel on your shoulder is a good person to have; that angel being an angel investor. Angel investors typically expect a 20 to 25 percent return on their investment in your business, are very thorough before agreeing and likely will want a say in your business. But this financing option also comes with perks.

It gives you the money of course as well as access to knowledgeable business owners who want to help people like you starting out by giving advice and sharing their strategic experience in overall business operations and your industry. Venture-capital investors are an option if your small business is already bringing in revenue. These investors focus on specific industries, so they’ll give you great advice on what you should do next. But, they also aren’t super patient and tend to expect their investment back within a three to five-year time frame.

Related Article: 5 Surprisingly Cheap Forms of Small Business Financing

4. Home Equity Loan

Being a homeowner has its advantages when looking to start a business. Owning a home means you have equity, and you can use that equity to fund your business by getting a home equity loan, or taking out a second mortgage. With this method, you don’t have to meet a certain age to qualify, it typically offers flexible interest rates that are lower than traditional commercial rates and you’ll have to make regular repayments.

All financing options include risks, but with home equity loans, you risk losing your home if your business fails, and for some that’s a risk they’re not willing to take.

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