The Most Popular Sources of Small Business Loans
Lending has become a competitive business as entrepreneurs struggle to find ways to begin or sustain their ventures within the United States’ rebounding economy. Rumor has it that big banks don’t issue small business loans, and for the most part that isn’t true. This remains a popular way for smaller companies to secure funding when they qualify. When they don’t, however, there are plenty of other sources of financing available to the small business community.
Small Business Administration
If you don’t qualify for a bank loan, the SBA has different financing that is suited to mom-and-pop ventures, including grants that do not require pay back. For a loan, the process is fairly straightforward, and the money lent usually comes with a low interest rate. Remittance is long-term, giving the business owner more time if needed to pay back the borrowed funds.
Small business loans have gone alternative, and many owners are looking at options such as crowdfunding, angel investing, and nonprofit organizations that offer microloans to secure their much-needed financing. These financing types give entrepreneurs the cash flow they need to start up their venture or cover their expansion, and in some cases, such as crowdfunding, the money might not need to be paid back. If it does, the financing comes in at much lower interest rates than other forms of alternative lending, such as merchant cash advances and peer-to-peer lending.
Many small business owners finance their dreams themselves, whether through personal credit cards or other assets or via family and friends. One advantage to using your personal credit card for business necessities is that your purchases will be protected; business credit cards do not offer consumer protection plans.
Other assets include personal savings, which might be tapping into your nest egg but is also financing your needs in full without the need to pay back small business loans with interest. If you have family and friends willing to finance your venture, you might find the money coming to you as a gift, or at least with a reduced interest rate compared to bank and alternative loans.
Small business loans are ripe for the taking; it just depends on your personal preferences in financing your business. You might be a traditionalist who wouldn’t consider anything other than a big-bank loan, or you might be a rebel ready to crowdfund your dreams to reality. Whatever way you choose to finance your business, make sure you keep your eye on the prize and turn your dream into a profitable venture.