Securing capital is one of the most important hurdles to overcome when starting a new business. In fact, 29% of small business dreams come to an end due to funding limitations. This is why 43% of small businesses applied for loans in 2019. Materials, advertising, and payroll can add up to thousands of dollars or more before your company even opens its doors depending on the industry.
Funding relies on credit, which can take time to build. This means that initially, the full amount of capital you need to get started may be inaccessible from a bank. In that case you may need to consider one or more alternative solutions for funding. This includes friends and family, angel investors, crowdfunding, unsecured loans, lines of credit, credit cards, equity based loans, IRA/401K accounts. Creative entrepreneurs may find much more ways to fund their dream business.
Angel Investors:
Angel investors are individuals with surplus capital who are willing to lend money to start-ups. In return, they expect a combination of either equity in the company and/or influence over how it operates. They share in the risk and grow with you. Ensure that you have a well-constructed business plan if you select this option.
Unsecured Loans:
An unsecured loan is based on creditworthiness, or likelihood that the individual or business will repay the loan. For example, a credit card is considered an unsecured loan. The benefits of working with an unsecured loan from Lending4Biz is that neither a business plan nor collateral is required to apply. As an added bonus, funds can be made available within 24 hours.
Term Loans & Business Lines of Credit:
To meet working capital needs businesses have been using credit lines for years. When opportunity knocks, business conditions change or unexpected issues arise banks can provide a Line of Credit that gives businesses a 24 hour access to multiple separate loan drafts over some period of time, sometimes with minimum first draw requirements. Basically if client approved for a larger loan amount and they do not need it all upfront, and got a project start in month or two, lenders can get them more working capital later over 90 day or 180 day period of time depending on product they select. Lines of credit can be used at the discretion of the borrower to cover a variety of business needs.
Similar way Startups can utilize credit card stacking products which allow them as business owners to get up to $150k line of credit with 12-24 months of 0% interest. This creative Lines of Credit program is a unique product that will give businesses with or without revenue to gain access to the cheapest capital available.
Lending4Biz offers credit card line of credit up to $150,000 with 0% interest for up to 24 months along with working capital loans (line of credit) up to $675,000 with flexible payment options.
IRA – 401K Funding:
This product allows you to withdraw upon retirement funds without paying penalties or taxes to the IRS. Giving ability to pay off high interest debt or explore different opportunities outside of the stock market. Startup and business owners can both use their funds any way they would like.
Learn more and apply for funding on our Financing Solutions page.
Once your business is established and successfully operates for a couple of years, the Small Business Administration (SBA) is an option to continue to grow. This government agency works to protect both lenders and small businesses by setting standard borrowing guidelines that include repayment terms and interest rate caps. This allows for risk assessment on behalf of the lender, and easier access to capital with clear terms and conditions for borrowers.
There are three types of Small Business Administration loans available.
- The 7(a) loan is the most common option for businesses with equity or those that want to make a real estate purchase.
- 504 loans are an option for real estate and heavy machinery financing from Certified Development Companies (CDCs).
- Microloans are smaller scale funding options that provide up to $50,000. Funds are designed for general funding including machinery, inventory, working capital, etc.
Fortunately, Lending4Biz can assist with your SBA long-term funding options as well. Learn more on our SBA Long Term Funding Options page.
