As a small business owner, you’re going to need money to get started. Money will be needed for pretty much everything, including renting space, hiring workers, marketing your products, and so much more. Unfortunately, most people do not have enough money to get started. This is why it is often best to seek out funding elsewhere. Taking out a loan from your bank is certainly a good choice. However, there are many other small business financing options that you’ve probably never thought about. You’ll learn more about some of your options below.
Online lending might be a good option for your business. This type of lending is great for businesses that do not have a great credit history. The interest rates will often be higher, but online lending is still a viable option for many. Usually, you’ll be able to obtain up to $50,000 using this method. The money can generally be obtained within a period of one or two days. You’ll be required to repay the loan daily or weekly and you should have it paid off pretty quickly. These loans have shorter terms, which can last as long as several weeks to a few years.
Believe it or not, you might be able to use your retirement savings to get the money that is needed. This type of funding is often used for certain activities, including purchasing equipment, buying a franchise or even opening your first store. This option will take a little bit longer. In general, it can take about a month to get it started. A corporation will be created for a small business and a 401k will be opened. Your current retirement assets will be deposited into the 401k and it will basically become a shareholder of the business. With this option, you won’t have to pay interest, but you do risk losing your retirement savings.
Bring On Investors
Most people lack the funds to start a small business. While some will choose to fund their business venture with short-term loans, others will opt to bring on investors. Of course, it is never easy to find investors who are automatically interested in investing money in a startup. But, with a good business plan and the Small Business Administration (SBA), it is possible.
Investors are not willing to risk their money, so it will be up to you to convince them to go ahead and do it. A solid business is a necessity, as it will identify your competitors and market. It should also include up to five years of financial projections.
If you have poor credit, you should probably check out the Better Credit Blog and learn about credit repair companies. Otherwise, you can think about crowd funding. There are many websites that offer crowd funding options. With many, you don’t have to worry about giving up stake in your company. However, there are some that you will have to. With Upstart, you can allow others to invest in your idea. In return, you’ll be required to share a small percentage of your company’s income for the first 10 years. It is definitely a good option for anyone with poor credit.