Getting started in business can be difficult because you need funding to get what you need, but banks and many other lenders are understandably reluctant to lend to a small business with no financial records to speak of. When you apply for a business loan, lenders like to see solid financial records showing that your company is doing well, which is simply impossible when you are starting a brand-new business and haven’t made any money yet.
But the good news is that there are alternative options available. No matter what kind of business you want to start, getting the funding that you need to get things off the ground and turn your dreams into a reality doesn’t have to be impossible. if you need business funding, but your business is too new to consider the bank, here are some options that you might find useful.
Small Business Lenders:
Private, non-bank business lenders like Diverse Funding Solutions are an ideal choice for brand-new businesses looking to get funding to get off the ground. A small business lender will typically be more inclined to allow you to borrow money to get your business started, and there is often the option for smaller loans compared to what you would expect to get from the bank. This makes them an ideal option for businesses who only need a small amount of funding to get started, but need the funds nonetheless. While small business lenders do typically have higher interest rates compared to bank loans since they accept a wider range of clients, it’s definitely an option worth considering if your business is not eligible for a bank loan.
Angel Investors:
More and more small businesses are turning to angel investors, as it is an ideal way to get the funds that you need for your business, along with the support of a professional. An angel investor will invest the funds that you need in return for ownership of shares in your company. Many will also serve on the board of your company so that you can benefit from their input in big decisions. Many angel investors are highly experienced business people themselves, and can offer a novice entrepreneur a lot more than simply funding; they will work with you to help your business achieve its goals and become a success.
Crowdfunding:
Crowdfunding for business is becoming increasingly more popular, as micro-investing takes off amongst the general public. Crowdfunding for your business means collecting funds in smaller amounts but from a larger range of people, who will all buy small shares in your company in the hope that it reaches its goals and becomes successful. For many new small businesses, crowdfunding is often an ideal and rather easy way to get funding, as it’s easier to persuade a lot of people to invest a small amount in your business compared to getting one person or company to invest a large amount.
Friends and Family:
You might also want to consider doing things the non-traditional way when it comes to getting funds for your business. Try asking your friends and family if they would be able to help you out. You can do this in a more official business loan-style capacity, where you promise to repay your loved ones the money that they lend with interest, or give them the option to buy shares in your company and benefit financially from their investment in the future. However, it’s important to be very careful when it comes to taking money from your friends and family to start your business since this could backfire spectacularly if your business does not succeed. It’s important to have a solid business plan in place and ensure that anybody who is providing you with funds knows where they stand should things not go as well as expected.
Personal Loan:
While it’s not the most advisable choice of business funding option, you might want to consider taking out a personal loan to get your company started. This is usually an option if you are thinking of starting up as a sole trader, as things can get complicated if you are using personal debts to fund a limited company. Taking out a personal loan to fund your business is typically only done as a last resort if you are struggling to get funding elsewhere, but there can be some benefits to it.
Your Own Funds:
You might want to consider skipping borrowing altogether and use your personal funds to get your business started. This might take some extra time if you need to save up, but it can be worth it if you don’t want to worry about having to repay loans or sell shares in your company to an investor. Investing your own money into starting your company should never be taken lightly, and it might be worth consulting with a financial advisor before you start to put together a plan for how much you should invest and how to repay yourself from your profits.
Business Credit Card:
If you only need access to a relatively small amount of funding to get your business started, a business credit card could be an ideal alternative to a business loan. There’s a higher rate of acceptance for brand-new businesses applying for a business credit card, and it provides you with an ongoing line of credit that you can turn to whenever you need to pay a business expense that you cannot cover otherwise. Business credit cards are also often easier to manage since you get to control how much of the credit you want to use at any one time. This can reduce your repayment amounts compared to repaying a business loan, which will be a set monthly amount regardless of how much of the funding you have utilized.
Getting funding for a brand-new business isn’t always easy, with banks requiring detailed and solid financial records before they will accept an application. The good news is, there are several alternative options available that you might want to consider to get your business going.
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