Finding the money to start or expand your small business is no easy task. Certainly, there are a few options worth considering, but they each have different requirements and take varying amounts of time to complete. Therefore, if the timing is a factor, then it’s worth looking at the choices based on how quickly the funds could be available to you.
Here are four possible ways to get money for your business.
1. SMB Loan
A Small Business Administration loan is one designed expressly for small business owners to apply for. These loans offer some of the lowest rates and are worth considering. The downside to them is that they can take many months to arrange and receive the funding. Also, some business owners are disappointed to learn that they’ve been turned down, so it’s not a slam dunk.
Fortunately, there are more options for ways to borrow money for a business that requires less time and are often easier to qualify for. So, if you’ve been turned down for an SMB loan previously, all is not lost.
2. Accessing Retirement Funds and Other Savings
Sometimes, people look to tap retirement funds or savings they have access to. Many of these funds are restricted when it comes to withdrawals. Nevertheless, sometimes it’s possible to access money this way to put it to work in the business.
It should be questioned whether this is a sensible move. Should the business fail, your retirement may be at risk as a result. Trying to get ahead only to land in an even worse financial position makes for a poor risk. It’s often better to avoid this in favor of taking a loan to avoid penalties and other concerns.
3. Taking on a Business Partner
A business partner can bring with them investment capital and business experience. For some people, that’s a good bargain in exchange for parting with a percentage of their shares in the business.
However, it also means sharing in the profits and any future resale value of the business. The exit valuation may be enough to retire on, but when taking on a partner at the start, that may not be the case later on. Also, difficulties in dealing with a business partner are not to be discounted either. Sometimes, things can get awful messy with partner disagreements.
4. Business Loan or Line of Credit
Taking out a business loan or securing a line of credit are both useful ways to get funding for a business venture.
Most business loans are short term, running over 12 to 18 months and being repaid with interest over this period. A line of credit is also repayable for a year in most cases. Therefore, if pursuing this option, it should be planned around the current cash flow to ensure it’s affordable.
When investment or lending is required to fund your business, then it pays to consider all your options carefully. How the money will be spent is also important; there should have a plan in place for that too.