Whether you are starting a business or planning to expand an existing one, you may be asking yourself “Who can finance my business?” In today’s post, we offer an overview of the options at your disposal.
Who Can Finance My Business?
Knowing who to turn to for business financing is fundamental to the success of any company. Below are some of the most common options for business financing: Knowing the pros and cons of each alternative will help you make a decision that makes sense for your business.
1. Savings
If you have been saving money for a long time, you can use that money to finance your business. This is a convenient alternative because you are using money that is already yours, so you are not getting into debt. However, not everyone has enough savings to cover all the expenses that come with starting or expanding a business.
2. Credit Cards
A credit card is another alternative you can consider to finance your business. In any case, there are some caveats you should keep in mind. First off, mind the difference between personal credit cards and business credit cards. Financing your business with a personal credit card can be messy from a tax standpoint. Plus, your credit score plays an important role when you apply for a credit card. So if your credit history is less-than-stellar, this might not be the option for you.
3. Bank Loans
This is probably the most common form of business financing, but that doesn’t mean that it’s easy to get. On the contrary, banks are famously stringent when it comes to the requirements borrowers must meet in order to get financing. If you and your business have a solid and well-established credit history, then a bank loan is a good idea. Otherwise, you may want to look at other alternatives.
4. SBA Loans
If you can’t meet the strict requirements of a bank loan or other lending institution, SBA loans are a good option. Since SBA loans are partially guaranteed by the Small Business Administration, they offer more flexible terms and less strict requirements than bank loans. While there are many different subtypes of SBA loans, the two most popular alternatives are 504 loans and 7(a) loans.
5. Revenue-Based Loans
As you may have noticed by the examples above, getting capital to move your business forward isn’t an easy task. Lending institutions want to limit risk as much as possible, so they require you to produce an endless stream of documents in order to even consider you for financing. If you have a checkered credit history, then you should consider revenue-based loans. With a revenue-based loan, you pay the amount you borrow not in fixed installments, but with a percentage of your revenue. To learn more, check out our previous blog, “Are Revenue-Based Loans a Good Option if You Have Bad Credit?”
Gellyfish: Business Financing Made Easy
Looking for business loans that combine flexibility and certainty of execution? Gellyfish Commercial is the answer!Contact us today by email (info@gellyfishcommercial.com), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our financing solutions.
