Starting a small business requires working capital. Acquiring this capital is an absolute must if youâ€™re attempting to get a new business off the ground. The problem is itâ€™s not easy to convince someone to fund your business.
Alternative lending is a great way for established companies to open doors to a number of different options for business loans. Startup loans, on the other hand, might be a lot harder to find.
Would you want to lend large amounts of money to a business without any revenue? Now you see the challenges many startups face.
Weâ€™ll now take a look at a number of startup funding options that are quite successful in 2017.
- Small Business Administration (SBA) Loans
There is a micro loan program made available by the United States Small Business Administration that provides small businesses with up to $50,000 in loans. This funding is also made available to nonprofit childcare centers.
The SBA micro loan program typically lends $13,000 per applicant on average. But there is a downside to this program for certain small businesses.
What downside? Many small business owners run into problems because they need more than a â€œmicroâ€ loan. So the funding provided by this program will not always meet every business ownerâ€™s needs.
When funding is insufficient, the SBAâ€™s flagship 7(a) is a good alternative option for small businesses looking to generate startup capital. Just know it isnâ€™t easy to receive funding from a 7(a) loan.
Established businesses will typically qualify for this loan over startups because they can provide collateral. They already own physical assets like equipment and real estate that they can sell off if they were ever to default on their loan.
According to Smallbusinessloans.co, a website answering the question â€˜can you get a small business loan with bad creditâ€™, â€œAccess to credit is essential for small businesses who are going through the normal ups and downs of the business cycle.â€
- Microlenders and Nonprofit Lenders
If youâ€™re having a tough time getting a loan from the Small Business Administration, a better option is to contact nonprofit lenders and micro lenders. This is a potential avenue for financing thatâ€™s less difficult when your financial picture is on the shaky side.
These lending institutions will focus on lending money to small business owners that are minorities or traditionally disadvantaged. If the business is in a community thatâ€™s having struggles from an economic standpoint, itâ€™s easier to qualify for nonprofit microloans.
It isnâ€™t always be easy to qualify for a loan from many of these lenders, but they want to help minority business owners and those with disadvantages, so itâ€™s certainly in your best interest to contact them if you meet their requirements. You may even qualify for additional financing down the road, so making this connection now is clearly the wise choice for your business.
If traditional lenders or the SBA do not approve you for a startup loan, you always have the option to set up a crowdfunding campaign. This method of gathering startup capital for new businesses is extremely popular right now and will continue to grow in the future.
Why choose crowdfunding? You should have no problem raising money when all else fails if you have a startup that you believe in.
You can offer friends, family members, and your customer base the opportunity to fund your startup. By providing incentives, people will flock to your crowdfunding offering and happily fund your business venture.
If youâ€™re having a tough time getting startup capital in 2017, please use the options mentioned today to turn your business dreams into reality.
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