Funding a small business is one of the hardest parts of starting your own business. You need money to get your plan off of the ground, but many funding sources will want you to demonstrate profitability before providing you with the funds you need. Fortunately, there are ways to obtain small business funding to help you take the plunge into entrepreneurship. Here are five tactics you can use to secure small business funding.
Obtain A Business Line Of Credit From A Traditional Bank
A common tactic for raising small business funding is securing a business line of credit. The amount of the line of credit will depend on a number of factors, such as the length of time the business has been established, the potential profits and revenue of the business, and the ability of the business to repay debts. The paperwork required to obtain a business line of credit can be substantial and the interest rates high, so many entrepreneurs try to obtain alternate methods of small business funding before going this route.
Secure Funding With An Online Lender
Many people that have secured small business funding through an online lender have said that the process is easier and faster than dealing with a traditional bank. Online lenders require less paperwork and can offer lower interest rates on loans than traditional banks due to lower overhead. Some online lenders that offer small business funding are Kabbage and OnDeck.
Apply For Grants
Many grants are available to help entrepreneurs get their small businesses off the ground, but there is fierce competition for the grants, so you’ll have to stand out to win the funding. The criteria and the requirements can be difficult to meet, but if you do meet them, you have a chance of securing business funding that you will not have to pay back. Do an online search to see if there are grants that you may qualify for and read the details of the ones you are interested in carefully to make sure you do not disqualify your business through errors in the application process.
Seek Out Crowdfunding Opportunities
Crowdfunding allows the masses to contribute financially to your small business. Using a crowdfunding website, you can post your business plan and request funding up to the limits allowed by the platform. The fees and interest charged for this type of funding will depend on the amount of funding needed and the credit score of the requester. You’ll need a good credit score to apply for funding through many of the crowdfunding and peer to peer loan platforms.
Form A Strategic Partnership With A Vendor
Forming a strategic partnership with a vendor essential to your business is another good way to obtain the small business funding that you need. Vendors know that the success of your business could heighten the success of their business as well and are often eager to form a partnership that would be mutually beneficial. The details of the partnership will depend on the needs of the parties and the length of time the partnership is expected to exist.