Finding the necessary funds for your new business needs the most attention. Several factors can come into play, including your credit score, past lending history, your business plan, and how long your company has been operating.
So, whether you plan on opening a mom-and-pop shop or drive-thru convenience store, here are five places and ways to find a loan for your small business.
Banks and Credit Unions
This is the traditional way small businesses owners find financing. Financing with a bank or credit union can also be an economical source of capital as they may provide a competitive interest rate. Keep in mind, however, that loans typically have lengthy applications and can take time to approve.
Small Business Administration Loans
Small business administration loans do not lend directly to the business owner, but instead sets guidelines to partnering lenders, community development organizations, and micro-lending institutions who lend the capital instead.
This reduces the risk to the lenders and makes it easier for small business owners to gain access to the loans. SBA loans can have portions guaranteed and are available in single-digit interest rates.
Alternative lenders can be found online and offer different options that fit your company’s needs. These lenders are on the rise as substitutes to banks and can offer short-term financing and faster approval. These loans can also have higher interest than typical bank loans, so understand them before committing.
Many use credit cards to help finance their business because it’s one of the easiest forms of funding to qualify for. They’re also a great way to build credit, and a strong credit history can help a small business owner qualify for lower-costing financing in the future. However, credit card interest rates can be high, so utilizing them for up-front purchases is a better option.
Another option is venture capital funding which can invest capital rather than debt. This requires higher risks but yields higher rewards.
The Alamo EDC Wants to Help You Become Successful!
No matter how you start your small business, the Alamo EDC wants to help. Whether it’s through funding from our revolving loan program or helping you get acquainted with other local business leaders, we’ll offer the guidance you need. Contact us today to see how we can help.