To fund a small business is no mean feat, and business owners and managers understand that no approach fits all. Other than each business requiring a unique funding requirement, every financing option varies in eligibility criteria, amount terms, and availability.
What to do before getting started
Before you commence looking for business loans, there are a few things that you should consider doing, and among them include:
1. Work out the amount that you want to borrow
The financing needs of every business vary, and if you want part or whole capital funding, you should come up with a draft that shows how much you would like to borrow and what you will use the money for. If you know how much you should borrow to fund your business, you will have a head start, and you will be able to move forward quickly. This also helps you to narrow down on the lenders that you will approach to provide you with the enterprise loan that you need.
2. Get credit reports
If your business has been running for some time, you should get your reports from an approved credit reference bureau. The lenders will appreciate knowing your credit scores, which is based on your credit history and a wide range of other matrices.
3. Present a written business plan
A business plan provides a glimpse of many things- from how you intend to borrow the money, the products or services that you will deal with, and the managers who will be responsible for the everyday running of the business. Revenue projections should also be captured in your plan.
4. Have collateral
Borrowers who want business funding and who are willing to provide collateral enjoy a higher loan amount at a lower interest rate. If your business has assets, you can use that as your collateral, but if it doesn’t have, you may use personal assets as a security for the quick business loans.
Sources of business funding
1. Capital funding
This includes debt capital, venture capital, and equity financing. Each of these capital funding has its unique requirements, so a business should look at the requirements for each of them.
2. Bank loans
You should start with your bank when looking for funding for your business. Ideally, banks have various products at competitive interest rates, so check what they offer, their terms, and applications requirements.
3. Small business lenders
There exist many lenders that cater to the needs of small and medium scale businesses, so you can get in touch with them and know if they can lend you the capital that you need to fund your business.
If you are an entrepreneur, you can check if there are grants that support your budding idea. While these are hard to get, they have very specific qualification requirements.
5. Crowdfunding sites
Crowdfunding sites are common these days and you can create a page for your business and market it. You will receive some offers, but ensure you check the fine prints and select the best funding for your business.