When a small business needs financing, where do you turn? There are many ways that a small business can obtain financing, each with its own unique advantages. While one may be good for a particular business, another may be more suitable for the next business. It all depends on the preferences of the small business and whether it will be approved or not. For small business owners looking to move up in the world, check out this list of sources for quick capital.
- Banks
This is probably the first thing someone thinks of when it comes to loans. After all, lending money to customers and collecting interest is one of the ways banks make their profits. It is usually fairly easy to get approved with a good credit score. However, as just said, banks make money on interest. Therefore, the interest rates on traditional bank loans tend to be slightly higher than those from other sources, although it varies with the market rate and the applicant’s credit rating.
- Cash advance for merchants
Although similar to a bank loan, a merchant cash advance is often more secure and carries less interest. First, getting approval from a company like Water Street Capital is a much easier process than going through a bank. As long as the business generates an average of $ 10,000 a month, you can confidently start applying for up to $ 500,000! The application can be submitted online and generally takes around 3 business days to receive the money, however the business can use the money for a variety of different needs, such as advertising, payroll, expansions, updates, and more.
The way the customer repays the loan is also fundamentally different and makes this option one of the best for small businesses. The business agrees with the lender to repay the loan with a small percentage of its sales each month (such as taxes). The amount is automatically withdrawn every month and varies with the success of the business. If you have a slow month, you pay less, and if you enjoy more earnings, you will pay off the debt faster!
- Fundraising
While it can’t really be labeled a “trustworthy” source, crowdfunding has exploded in popularity in recent years with sites like Indiegogo and GoFundMe. It can be a great way to win investors for a small business looking to expand. If the product is popular or unique enough, it will surely win backers. However, it cannot always be counted on to materialize. If the company does not receive enough investment to reach its minimum goal, it receives nothing. It is not the go-to source for large financial requests, but it has proven effective in the past, sometimes with companies that even generate millions of dollars!
