How to Finance Your Small Business

Bank loans are becoming harder and harder to come by these days with the increasing financial turmoil. However, just because you can't get a bank loan does not mean you can not find financing for your small business. Learn other ways to finance your small business so that you can build and expand your small or home business.

Difficulty: Moderate

Instructions

1. 
    

   Try a Credit Union!
   Sometimes credit unions offer better financing packages than large banks and there requirements tend to be slightly lower. In today's market without a perfect business and personal credit score you will not get a bank loan. A credit union may work because when you open an account and get approved for a loan you actually become part of the owning body. If you look to a credit union to finance your small business make sure to shop around because their rates tend to vary greatly.

2. 
    

   Look For A Mircolender!
   If you are trying to expand or start a small business and are not in need of a substantial amount of capital, a mircolender may be a great option. They generally do not loan more than $5000 but tend to have good rates and since they have lower risk their interest rates tend to be lower. One downside to microlenders is the turn around is generally 1-2 months. However, if you can wait that long, microlenders are a great source of financing for your small business.

3. Venture Capitalists and Angels
   Venture capitalists and angels can be a great source of financing for a small business but you need to have a great and unique idea that is likely to generate high income. Both are very choosy about small businesses in which they invest however if you have a great idea and a solid business plan, this could be a great option for your small business. However, these people will become shareholders in your company so you need to consider that.

4. 
    

   Credit Cards
   Although this isn't the best option, it may be the quickest for people looking to finance their small business. You can get instant access to cash by opening a credit card for your small business but remember the interest rates are high and you are personally responsible for payments. Unless you expect to make a lot of cash quickly, this isn't a great option to finance your small business.

5. 
    

   Friends and Family!
   Although many people don't want to ask friends and family for money, it can be a great option for your small business. These transactions generally have little to no fees and paperwork which saves you time and money. However, choose family and friends carefully and discuss any risk involved in their investment in your small business.

Tips & Warnings

• Choose your financing options carefully! It is important to expand or start a small business but do not get in over your head!

Resources

• How to Determine What You Need to Start An Online Business

[Coach4U]

on 2/15/2009 Nice job.

[paint-it]

on 2/15/2009 Very useful and well written!

[WordWhizKid]

on 2/14/2009 Thanks for all the useful information, I will hang onto this for reference! 5*s!