If you’re worried about how to secure financing for your small business, read on. Half the battle is knowing where to look.
Should I get a bank loan?
If you have a strong credit history and a full business plan in place, or if you’ve been in operation for some time and have documented revenue, bank financing or a traditional loan might be an affordable option. Lenders suggest that business owners first submit an application to a bank with which they have an established relationship, or ask an experienced accountant or lawyer to contact a bank on their behalf to present a proposal.
But what about the rest of us?
If your business is still in startup phase or has yet to produce much income, it might be difficult to get a loan from a traditional lender. Given the current credit crunch, even applicants whose businesses are up and running may be denied a loan, especially if they don’t have a strong credit history. In these cases, your best bet is an alternative source of credit, such as a microlender like Accion who factors in things like character. Other possibilities include credit unions and venture capital firms.
Should I just put it on my card?
Banks often encourage applicants who have been denied traditional credit to use small business credit cards instead. You should always use credit cards with caution, however, as interest rates are typically higher than term loans and hidden fees are common.