How To Get Funding For A Small Business

Business Funding

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Small business funding is necessary because you will certainly need a sufficient amount of capital. Making sure your business has enough capital is a major responsibility. Financing is always a logical and important aspect in every business endeavor, be it great or small. Also expect the need for further funding even if your startup is already operational.

Don’t worry because small business funding is not impossible or difficult these days. If you need capital to startup your venture, here are five simple and popular ways to obtain the funding your new venture will need.

Personal Savings

Tap into your personal savings. If you have enough money in your bank account, you may use it to invest in your own business. You should not use your entire savings. This may be all the funding you need if you have a huge account. This is the best way to fund a small business because cash will be available instantly and you don’t need to incur fees and interest payments. However, you must make wise business choices to limit your risk because your own money is at stake.

Bank Financing

Seek bank financing. If you don’t have much in your savings, you should obtain loans from lenders. Fortunately, there are now many loan options that can suit your business purposes. Moreover, intense competition among loan providers gives way to better loan products, more choices, and lower interest rates and charges. But be sure to meet the strict requirements to obtain approval. You may use a property as a collateral or security to obtain better options.

Non-traditional Loans

Check out non-traditional loans from lenders. If you find banks very stringent in approving small business loans, try non-traditional lenders. Some examples may include financial institutions, credit unions, private financial businesses, and loan specialists. Non-traditional loans may come with lower interest rates, reduced transaction costs, instant approval, and better terms. If you an existing business and have been in business for 6+ months and generate $5K+ per month, a business cash advance loan could be a good option to gain working capital for your business.  Scout the current lending market and find many other options aside from those offered and provided by banks, which usually come with higher rates and bigger fees.

Investors

Seek possible investors for your small business. If your venture is promising enough, it can easily entice interest from any investor. Many businessmen and capitalists are seeking for potential investment opportunities. Your small business may be part of the selection especially if it has a reasonable capitalization requirement and very promising products/services. Closing an investment deal with a potential investor will surely be easier and faster than a banker.

Family and Friends

Ask for financial support from family or friends. They will probably be your biggest supporters as you get your business off the ground. Just show them how enthusiastic you are about this opportunity.  If your family or friends are well-off, you may ask them to invest in your venture and provide small business funding. You may borrow money from them at no interest costs. Make sure to immediately return the amount within the time frame you set. It will also be ideal if you offer to pay them interest for the amount you borrowed, even if they decline.   Remember, you don’t want to lose a relationship over money.  Be professional and pay them back in a timely manner and everyone involved will be happy.

Those are just some options for small business funding.  If you put your mind to it, I’m sure you can think of many others.  Good luck in your journey for small business funding and a successful business.

The Types Of Financing For Small Business

Small Business Finance

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Starting a small business could be difficult but rewarding. As a new venture, it could experience ‘birth pains.’ The owners of small businesses are often challenged by the scarcity of resources, especially in the financial aspect. If business financing was easier, most of us would surely have established and maintained our own sets of small businesses. But because capitalising and funding such ventures is difficult, only those with guts and resourcefulness go on.

Not surprisingly, there are many small business finance options that are available in the market to cater to small businesses, including those available from here. Common small business finance products could be categorized into three areas. Here is a brief rundown of those categories. Which funding would you consider and choose for your own small business?

Debt financing

Most small businesses prefer debt financing as a source of funding. The amount is sourced out from various lenders, non-traditional loan providers, or financial institutions. This is obviously the most viable option. Lenders could easily approve and provide loans if all the requirements are met. The loan is usually approved after the loan provider has looked at the business’ cash flow, asset liquidity, and collateral.

Most of the time, a lender also requires submission of a business plan. The financial statement is another usual requirement. The loan provider has to make sure the financial condition is healthy to avoid possible risks. What is most liked about debt financing is that small businesses do not have to ask for favors from anyone. The control of the business is also left to the owner.

Equity financing

For small businesses that experience difficulty in obtaining debt financing, equity financing is an equally viable option. It helps that there are numerous institutional and private investors that are out in the market. Such investors would readily provide money as a form of investment. That means they would ask for an equity or part of ownership in the small business.

Equity financing could come from a business owner’s family or friends. There are also private investors with high net worth who are known more popularly as angel investors. Venture capitalists are also abounding in the market and are looking for many opportunities to invest in small businesses. The setback is that full control and ownership is not left to the hands of the business owner alone.

Special grants

The government could be offering special grants to small businesses within its area of jurisdiction. This could be part of the commitment to help strengthen the overall local economy. In many cases, small businesses in specific industries (like technology) are given special grants if they apply for one.

Grants are generally aimed at helping fuel innovative and productive fires of small businesses. However, such small business finance opportunities are often overlooked. Yes, at times, it may be hard to look for and obtain such grants but all the efforts could be worth it. Another setback is that governments may impose stricter standards and requirements when issuing and awarding grants. 

Business Networking Sites

Business Networking Sites

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You’re hopefully at this point utilizing some aspect of social media networking for your business. There is absolutely no getting around just how essential social media has become to the continued health and growth of businesses of all sizes and types.

How Is Your Social Media Portfolio?

At the very least, your business should have the social networking essentials. No matter how big or small your business might be. No matter what your specific marketplace might entail. You should have the social networking essentials. You should almost certainly have a Facebook page. This is still the primary social networking hub for the world. It should be part of your social networking plan, whether you’re interacting with customers, visitors, or even similar businesses. Twitter and Google+ should also be a part of your social media portfolio. The fact that these sites are viable social media tools for networking isn’t likely to change anytime soon.

But is that all there is? Does your social media networking need to go beyond the basics?

You can think about it if you like, but since the answer to the above question is likely yes, it might be time to start thinking about things that can actually enhance your social media networking. Facebook, Twitter and Google+ are all nice, but it might be time to consider some possibilities that are a little more specific to the world of business.

Social Networking Sites For Your Business

You might be surprised at just how many social networking sites have emerged with the primary focus on social networking opportunities for businesses. Social networking isn’t just for the giants anymore. It has become a means of connecting for specific religions, political views, and even for businesses.

At the very least, some of these social networking sites for businesses are worth investigating further:

• Biznik: A great social networking opportunity for small businesses and entrepreneurs.
• Cmypitch: Entrepreneurs can meet here for quotes, advice, and more.
• Sunzu: An opportunity to share knowledge, build contacts, and more.
• JASEzone: A community designed around finding clients and business partners.
• Ryze: This business networking site gives its users the chance to network based on location, interests, and employment history.
• XING: 7 million members comprise this European business networking opportunity.
• Young Entrepreneur: Small business owners and up-and-coming entrepreneurs can get together here for some considerable business networking opportunities.
• PartnerUp: Another fantastic way for small business owners and young entrepreneurs to meet, connect, and potentially work together.

Using Social Networking With A Business Slant

No one is saying these business social networking sites are absolutely critical. But if you find your business struggling to break out of the pack, if you find yourself looking for ways to connect to both consumers and similar businesses, any one of these sites could help you get the ball rolling. There are several other social networking sites for businesses out there, but any of the above would be good ways to test the waters of this intriguing possibility.

How To Build Business Credit

Building Business Credit

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Most startup businesses encounter difficulty when seeking approval for business loans from banks. This should not surprise anyone as lenders are often stricter because they dislike the idea of getting higher exposure to risks. It is not impossible to get sought-after approval for loan applications but it may take time and it may be too tedious for any business owner.

Building business credit is one way to make it easier for any business to seek approval for bank loans. Lenders run credit investigations before approving loans and that is where the process stalls. If your venture has a reliable business credit, you can be sure you can access financing anytime you need it.

Funding Instantly offers a free consultation for business funding and effective ways for building business credit. If you want to avoid being rejected when applying for a loan from any lender, here are helpful tips that can serve as your guide.

1.     Improve your personal credit score.

Lenders will look at the personal credit rating of the business owner. That is highly possible if the venture is a startup or if it lacks its own business credit. Thus, before approaching any loan provider for a business loan, be sure you have a good credit history. Lenders will always be mindful of any borrower’s reputation and credibility especially when it comes to handling finances. The credit score can say a lot about your financial management skills. If you have investors or business partners who own more than 20% of your business, they may also be subject to a credit check.

2.     Seek credit before you actually need it.

Apply for any form of practical and logical credit soon after establishing your business. Doing so will help you immediately build a business credit history. Small businesses usually take up to two years before gaining the confidence of lenders. Obtaining a business credit card or getting a very minimal bank loan can speed it up. Your business needs to demonstrate its effective financial management capability. To accumulate positive credit scores, it is wise to get very small loans or credits and pay those immediately. That is why many businesses now take small loans even if they are not yet needed.

3.     Have financing relationships with more lenders.

Don’t rely on just one loan provider, although loyalty pays off. Most of the time, lenders instantly change their lending policies and you may have a hard time accessing financing when you need it most. You may get a business credit card from a major bank and a business credit line from a credit union or local bank at the same time. Just be sure you have a fallback when your lender suddenly declines your loan application.

4.     Find available alternatives.

Banks are not the only providers of business loans. You may consider non-traditional loan providers that offer and provide business credit at lower rates and better terms. Asset-based lending and crowd funding are possible options you may take if those are available in your area. Just make sure those loan providers report to credit agencies and that your diligent payments will reflect on your business credit scores.

The bottom line is that if you want capital for your business, it starts with building business credit.  Now that you've reviewed the options, you can make a wise decision as you move towards a successful business.

Business Strategy

Business Strategy

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Are you planning to start a small business? Before you finally take the steps to do so, you should first determine and adopt a good business strategy that will guide your enterprise. It may not be enough to focus on your products or services. There has to be a guiding principle that can lead your venture to the path of success.

Here are three effective strategies that your small business should observe. Each business strategy is simple, yet logical and effective. Interestingly, you don’t need to spend more to implement these. Your small startup business can gain the edge especially when your competitors obviously fail to follow and adopt these practical business strategies.

Focus on customer service

Your small business would be on a similar playing field as major companies and a plethora of other small to medium sized businesses. There could be intense competition. But you may have the big advantage over all of those. As the owner and manager, you make your own business decisions on your own and instantly. Your small business can easily and quickly make and implement strategies without going through a long and tedious approval process.

To stand out, woo your prospective customers by providing excellent customer service. That is one area where you could be on the same ground with even the biggest competitors. Deal with clients personally and give them the best value for their money. Your customers would certainly appreciate it.

Bite off just what your business can chew

Don’t fall to the usual mistake of small businesses. It could really be tempting to take larger job orders that are beyond your current capacity. Aspiring too much to compete with other businesses may be enticing but it can invite more risks. Remember to make all your business aspirations correspond to present capabilities.

Try not to take more than your small business can actually handle. If you still decide to do so, you might lose not only time but effort and money. The business’ reputation would also be in danger especially when your business fails to deliver. Thus, it is a good business strategy to work only within your limitations. This way, you can do your best and keep your customers happy.

Be a good example

Your small business may rely on the output of your small team. It is an ideal business strategy to motivate your staff well so they could be more productive. Because you would be working with a very small group, try to set a good example. As a leader, you need to give guidance and be a role model to your employees.

Work hard so your team will follow suit. You may not command respect and credibility by slacking off. Make your staff feel that you are really part of the team. If your business needs to achieve goals, be the leader to do so. And of course, don’t forget to always treat your staff well. It’s always better when you earn their trust and loyalty.

These are just a few examples of business strategy that you can apply.  Remember, always keep learning and searching for new strategies to ensure your business is successful.