Sources for financing small businesses
If you are a business owner and want to expand your business or you are thinking of starting a new small business, you need financing. Financing is also required if you have to buy, borrow or get machinery or a storage place on lease, for your business.
You can either get this financing in the form of debt or equity. Debt finance is when you get money from someone such as a bank, in the form of loan with the promise of repayment in future with interest. Whereas equity finance is when you use your own money as the finance source or someone else provides you with funds and becomes a stakeholder in your business and gets profit with their investment.
Finance resource is the capital that you need, to spend on a business. If you are a businessman and are looking for a small business finance resource, you do not always have to go for a bank loan but you also have many other options that are even more suitable for a small business than the customary bank loan. This is not as terrifying as it may seem when you search about it.
But first of all, you need to make an appropriate estimation of the amount of money you would need for the small business. Taking too much or too less loan would harm you more than its benefit, with unnecessary interest or need of another loan respectively.
Another thing that cannot be missed before applying for a loan, is your credit history that should be checked before applying for a loan. So, it should be made better before applying for the loan.
Whenever looking for a loan or funds for the small business there are many options for you like venture capital firms, credit card companies and crowd-funding but mostly loan is taken from an online lender or from the bank. Because they are mostly much more available like online lenders are accessible throughout the day every day. Also, online lenders are willing to take a risk when banks do not want to invest in a new business. It is important to know if the lender is managed either by federal or state organizations.
Other than banks, there are many other small business funding resources which include: Kickstarter, Kiva Zip, Kabbage, small business partners, your own savings, contribution of your own family and friends, leasing, onevest, suppliers and customers, Funding Circle, LendingClub, Fundbox and PayPal Working Capital.
The best lenders for small business loan also consist of First home bank, TD bank, US bank, Celtic bank, United Midwest Savings, Wells Fargo, Huntington National bank, Manufacturers and Traders Trust company and JP Mortgage Chase.
When you are starting a small business, it is best to get the finance in the form of an unsecured loan as is does not require you to place an asset as a collateral. So, you would not have to worry about losing your asset in case of loan default. If you get the loan through small business administration (SBA), you would also get lower interest rates on your loan.