Whether your business is a start-up, or whether you’re simply a small and struggling entity, there will be instance when you need more working capital. Consider the 6 methods for financing your business right now.
Start with loan sources
The most direct source of small business funding is through loan sources. You’ve probably thought about all of these, but here’s a listing of the most popular sources
One of the most popular and probably the most obvious source for seeking out a small business loan is through the banks. Specifically, you’ll want to start with your bank. Since you’ve already developed a positive banking relationship with them, there’s a good chance that the loan officers will look favorably on granting you a loan.
But keep in mind that you have the right to shop around for the best interest rate terms on your loan, so don’t be shy about shopping for a loan with another bank.
One of the most prevalent non-profit organizations for obtaining small business loan funding is through the Small Business Administration. It’s important to note that SBA loans aren’t always available for application. Also, they have rules, such as, you can’t apply for an SBA loan unless you’ve been denied for a loan that you’d gain on your own, such as a bank loan. Be sure to research what other rules are involved before you apply.
Along with the SBA, there are religious and professional organizations. If you hold specific affiliations, then it could be worth you while to contact their financial administrators to find out of they lend members funds for small business funding.
There will be instances when a small business owner isn’t able to obtain funding through financial institutions or through non-profit organizations. That’s when asking for donations might be the next best step.
There are online and offline methods for raising funds. “If you’d like to try online methods, then there are popular sites such as GoFundMe, and Kickstarter”, says Eyal Nachum from Bruc Bond. Note that while GoFundMe allows you to ask for donations with nothing expected in return, Kickstarter requires that you offer your donors something in kind.
However, as a small business owner, offering your donors a product or a service could work out very well. In fact, lots of start-ups and young small businesses use Kickstarter as a platform for testing of product proof of concept.
If you’re interested in starting an offline fundraiser, then consider connecting with brands that allow you to resell their products. Keep in mind that some of these brands will require that you hold a charitable 501 (C) tax designation.
If you don’t hold that designation, then there’s always the old fashioned methods of raising money, such as sales, markets, or depending upon the product or service you’re selling, you can set up a pop-up shop that allows you to generate quick cash, without the need to buy into property ownership or rental.
Friends and family circle
One of the most time-honored traditions for raising money is to figuratively pass the hat around your friend and family circle. It’s arguably one of the easiest ways for you to raise cash — simply ask your friends and family to support your dream by donating money.
Dipping into your retirement funds is a risky proposition. However, if you have at least 20 more years until you retire, and if you’re in relatively good health, then funding your small business through your retirement equity might be the right choice, if you’ve run out of other options.
These are retirement products that offer a matching element that’s usually co-funded by your employer. The key is to see if you’re able to liquidate some of your investments. It’s crucial to realize that you could incur a hefty penalty for liquidating too early.
Life insurance policies
There are two basic types of life insurance policies that allow you to collect living benefits. One is through a whole life policy that has equitable living benefits attached.
There are also life policies called annuities. These pay out a dividend based upon a series of aspects. Again, there are often tax disadvantages to consider, but if you’re desperate for cash to fund your business, then this could be an option for you to consider.