Seeking funding sources to start or expand your business can often be frustrating and stressful. Finding a lender nowadays to offer a loan more than $10,000 is hard because they are weary about businesses that will default on the loan since this has happened in the past, especially when the recession hit. If traditional lenders aren't going to offer you funding, what other funding sources are available for your business? Here are some funding sources you need to consider:
Friends and Family
Although you may be weary about doing business with your friends and family members, they are usually one of the best funding sources available. They already have a given interest in your company because they want to support you. All you need to do it draw up a contract as to how much money you would like to borrow and how timely you will repay the loan. If they see that you are providing them with fair loan repayment terms, you will have an easier time convincing them to offer you the money. Balance their risk by only asking for a small amount from each person. This way you can get a $10,000 loan from your family but each person only needs to donate $1,000 or less. Always repay their funds in a timely manner because you will damage relationships with them if you aren't careful.
Personal funding and collateral
One funding source you need to look into is your own bank account along with collateral you can use to secure the loan. The Small Business Administration usually asks you to provide them with a 20% down payment to secure the loan. This is the best way to leverage their risk load when they offer you financing for your small business. What happens if you don't have enough money in your bank account to use as the initial working capital for your loan? You can use some of your personal collateral as a funding source. Your home is a great option to use as collateral because it normally provides you with the highest amount possible for a loan collateral option. Some other personal funding sources you have to work with include your credit cards, stocks, and other investments.
Angel investors
One option you have is to seek funding sources from angel investors and other interested parties. When you use investors, you do need to give up some of the control in your business. Investors usually don't care about your business credit rating; they usually care more about the potential your company has to offer. Angel investors are all around you so it won't be too difficult to find one that actually has something to offer you. Start by contacting your network and see if there are some people with deep pockets and would like to provide you with the financing you need to start up your business. The angel investors are a great opportunity because many of them will provide you with advice and assistance to help you develop new products and services and generate the income you need to sustain your business and repay their investment.
Joint venture financing
One funding source you have available for your business is joint venture financing. Joint venture financing is simply a partnership or alliance between interested parties that see potential in your business. Joint venture financing agreements are different from other finding sources as the money is usually pooled and then divided amount the company and investors. All the investors have some type of interest in the business and they can all provide input toward business decisions.
There are numerous funding sources out there, you just need to know which type of companies to look for that have a given interest in your business.
Corporate Credit Concepts specializes in funding sources. For more information about funding sources and how it might benefit your business, please CLICK HERE for a free phone consultation.