Small business funding is in high demand. As an entrepreneur, you are probably searching for the best and most cost effective option for business funding. If you are reading this, you’re on the right track for success. It’s important for business owners to understand financing options. As your business grows, you may need to shift how it’s funded. The decisions you make to launch the business will dictate the future of your investment. So how do you get funding for a small business? Keep reading to find out.
How to get funding for a small business
In some cases, you may be able to launch a small business with no funding. However, in most cases, small businesses will need funding sooner than later. While the U.S. Business Administration has special programs designed to help small businesses secure funding, approval is not guaranteed and requirements are strict. Perhaps your business does qualify for a Small Business Administration (SBA) loan but you feel this is not the best option or you may just want to know all your options. Small businesses may have more options available than they realize. So which type of funding is best for your small business? Each type of loan should have its own set of requirements. Business owners should review requirements before applying in order to save time and frustration. Learning about all options before applying can also help business owners select the type of funding that is best for their business. If you own a small business and need funding for inventory, you should check out Kickfurther.
Why funding is critical to business growth
Funding is necessary in order for businesses to cover day-to-day expenses, keep cash flow healthy, and finance expansion. You could have the greatest product in the world but if you have no capital to produce the product and market it, you shouldn’t give up your day job. Most businesses need some type of funding. Even well established businesses may need funding. There is no shortage of demand for business funding, thus encouraging lenders to find ways to meet the demand. As an entrepreneur, you may have a great idea but no extra cash to invest and grow the idea. So how do you get started? In the very early stages you may need to do some self funding such as personal loans, savings, or credit cards before being able to qualify for actual business financing. While these may not be the most cost effective options for financing, you’ll need to start somewhere.
What are the top ways small businesses get funding?
Depending on the stage of growth your business is in, you may be looking at different financing options. In addition, there may be different options available depending on what you are looking to fund. For example, you only need financing for inventory, you should consider an inventory loan or applying at Kickfurther. Let’s take a look at some of the top ways small businesses get funding.
Startups and small businesses may need to use personal loans for funding. Some lenders offer personal loans up to $100,000 with terms up to 12 years. In most cases, personal loan funds can be spent on just about anything. Personal loans can provide small businesses with the funds they need to grow. While personal loans usually have lower interest rates than credit cards, there may be lower interest options for business financing. However, in the early stages, your business may not qualify for other options. Personal loans can help your business get momentum and establish sales so that you can qualify for other types of financing down the road.
In some cases, business owners and entrepreneurs may have cash savings that can be used for business funding. Cash is typically the cheapest way to finance a business. Whether you use cash or savings or financing, there are risks involved. As a business owner you should reserve some cash for emergencies or unforeseen obstacles.
Credit cards can provide funding for businesses. However, credit cards usually have some of the highest interest rates. If you decide to use credit cards you should plan to pay down the balance as soon as possible. Business owners should strongly consider using a personal loan over a credit card.
Bank loans are usually challenging to qualify for and have a lengthy application process. However, if you can secure a bank loan it may be a smart option. Bank loans usually offer competitive fixed interest rates with predictable monthly payments. As an added bonus, you will have access to a professional banker that is familiar with your business and can provide advice. In most cases, banks will request collateral or a personal guarantee. Before applying for a bank loan you should make sure you meet the basic requirements. Banks usually have requirements for businesses such as time in business and proven sales.
Businesses and charities can raise money for inventory financing using crowdfunding. Individuals and organizations can create campaigns that investors can choose to invest in. Crowdfunding allows individuals and organizations to pool together multiple investors’ money. So what’s in it for investors? Investors make money on the interest you pay on the loan. In addition, investors may require stake or equity in your company. Most crowdfunding platforms charge fees for raising funds, which can add up quickly. Kickfurther takes a unique approach to crowdfunding that allows individuals and organizations to create campaigns and investors to purchase inventory on consignment. Kickfurther allows businesses to get the funding they need without giving up equity. We will dive more into detail about how to grow your business with Kickfurhter a little later on.
Venture capitalists may be willing to fund businesses. Venture capitalists are usually just wealthy investors focused on the long -term growth perspective of a business. While businesses can secure funding using venture capital, business owners usually have to give up equity and some control.
Should I borrow money to start a business?
Borrowing money to start a business can be risky yet rewarding. Of course there is always the possibility of failure that may deter some of us but there is also the possibility of great success. If you believe in the business you envision, you should borrow money and go for it. Just be sure that your plans are well thought out. If you borrow money, outline how it will be spent and what it will do for the company. What you want to avoid is borrowing money and throwing it into areas of the business that are not critical for success. It’s better to have a slow growing stable business that you can sustain as opposed to a fast growing business that you may lose control of. It’s perfectly acceptable to borrow enough money to get going and borrow more later on rather than borrowing too much too soon and becoming overwhelmed in debt.
How to apply for funding for a small business
Before applying for small business funding, you’ll need to determine what type of funding you want to apply for. Most lenders will require businesses to complete an application to get started. It’s likely that businesses will be asked to submit cash flow statements, business plans, and other documents. In addition, business owners may need to provide a personal guarantee. If you choose to apply with Kickfurther, you can get started online by creating an account and submitting your funding proposal. Once Kickfurther approves your account, most deals are funded within a day.
Grow your business with Kickfurther
We take a unique approach that allows supporters or backers to purchase inventory on consignment. Therefore, businesses can get the inventory financing they need without giving up equity in their company. With Kickfurther, you don’t have to start making your payments on funding until that inventory has begun selling, which eliminates the cash flow pinch caused by immediate repayment other finance lenders use. Brands that use us can repeatedly increase their total funding amount while decreasing their costs. To get started, small businesses can create proposals including a time frame for producing goods, a specified rate of return, and a schedule for repayment. Kickfurther supporters are repaid in full plus dividends.
If you need funding for business operations, you should consider one of the options above. However, if you need inventory financing, consider Kickfurther. At Kickfurther, business and supporters share a common goal which leverages success. Kickfurther was founded by Sean De Clercq, an entrepreneur who struggled to find affordable inventory financing for his own business. As an entrepreneur, he found a problem and was determined to provide a solution. With 800+ deals funded and a 99.5% success rate, we offer extremely low fees, no paid subscription, and can be up to 30% cheaper than other options.