Written by: Kevin Gardner
So, you have finally come up with the perfect idea for a business, or perhaps you are looking to expand and grow one that already exists. That's fantastic news! A new business venture is an exciting time that is full of potential and possibilities. Except how are you going to pay for it? Don't panic, we've got you covered with plenty of suggestions for securing the financing that you need to help you create a successful small business.
The obvious choice for funding for a new business proposal is a loan. A loan servicer can get you the cash you need in one upfront payment to cover all of your expenses. It's important that you do careful research and have a complete business plan to calculate the amount that you will need. You don't want to get part way into your project and run out of money. You also don't want to borrow more than is necessary since this will take longer to pay back.
If you have a less than stellar credit history, finding a loan could be difficult. Fortunately, there are bad credit business loans available. Everyone makes mistakes, and having a few financial dings on your record shouldn't stop you from achieving your goals. You can work with a knowledgeable loan specialist for advice on which option is right for you. If your credit isn't great, then you may need to offer collateral or have a cosigner for the loan. The age of your business and the purpose for the loan can also have an impact on the amount or considerations of the funding.
If you know that you are working towards opening a business, then start to put some money aside as soon as possible. Even a small amount of savings can be used for a down payment or proof of assets required to secure larger funding. Savings should be something that you strive to contribute to each month to build an emergency fund and have a fall back plan.
Line of Credit
If your financing needs change often, then a line of credit may be a good solution for you. This type of funding lets you apply for and be approved for an amount that you are able to utilize, but don't need to take all at once. You can borrow from your line of credit as needed, as often as you need, as long as you stay within your approved limit. This option is a lot more flexible and usually suited for businesses that are already well established.
Credit cards can be a way to pay for basic needs and supplies in a pinch, but should not be relied upon unless you plan to pay off the balance quickly. If you use them for short-term balances only, they can be a good way to improve your credit score and show that you are capable of managing your finances.
Sometimes it helps to look around your community, or even family, to find some interested investors. If you have a solid idea, then others may want to be involved and put up some money towards your project. Have clear terms when you bring other people into your business so there are no misunderstandings.
Expanded Area of Interest
Another way you could get the funds that you need is to expand your business plan and area of interest to increase the potential pool to borrow from. If you have a very narrow niche business idea, it may seem like too much of a risk to secure a loan, so consider opening up your idea. This is less of a lending risk since you have multiple areas to potentially generate income from. Not limiting yourself too much also increases creativity and keeps you looking for new and inventive ideas that could be highly beneficial in the future.
With some careful planning and thought, you can start to reach out and begin to secure the financing that you need to make your business a success. Have your business plan ready, and be ready and willing to answer questions and discuss the vision you have for your new venture.