You’ve got a great idea and an entrepreneurial spirit. What’s next? Obtaining financing for your small business.
You’re smart and inventive. But, if you’re like many small-business owners, the world of finance is about as understandable as Homer’s Odyssey, subplots and all, in its original ancient Greek. And the process of gathering information may seem just as lengthy as the epic poem.
Thus, we’ve given you this extremely quick guide to small-business financing. Naturally, it’s not meant to replace visiting with your financial advisor – or even digging up your own research. But it will give you an idea of what’s out there for small businesses.
How Small Businesses Traditionally Get Financing
Traditionally, small businesses have relied on banks for funding, as well as loans from friends and family. Those who have the savvy to put together a convincing business plan (and who have a generous dash of sales and marketing in their genetic makeup) may also be able to count on an infusion of cash from investors.
Today, however, the process of getting money to start or run your small business is changing. And no, we’re not referring to maxing out your credit cards. We’re talking about avenues you may have heard about: crowdfunding and SBA microloans. If you only need a modest amount of money to get your dream off and running, these methods are certainly worth looking into.
Is Crowdfunding Right for Your Business?
Asking complete strangers for money is not something most of us would class as a likely financing solution. Yet, this is basically what crowdfunding is all about, except that it’s over the Internet. Led by big names like Indiegogo and Kickstarter, crowdfunding lets you post information about your idea and get investments from various people until you hit your goal.
This sounds awesome and easy. It’s not easy, although the idea is pretty awesome for small businesses. To effectively work a crowdfunding campaign, you have to sell your idea. In other words, you’d better be a good marketer, writer, and designer – or be willing to hire one.
Another caveat is that, in some cases, you won’t see any money unless you hit your goal. And keep in mind that the crowdfunding company you use will take a cut of the proceeds.
Will this work for your business? If you have the sales chops, it’s a possibility.
SBA Microloans are just that – loans for very small amounts of cash. While the program provides amounts up to $50,000, the average loan is for only $13,000. These loans go through what the SBA site terms “certain nonprofit, community-based organizations that are experienced in lending and business management assistance.”
To qualify, you’d have to start by contacting the nearest SBA district office or by finding an approved intermediary through the site. Like traditional bank loans, a lot of factors are at work here. But if you don’t trust crowdfunding and you don’t need a huge amount of ready money, it’s a viable financing option.
Your bank, your parents, and your credit card aren’t your only small-business funding options. Before you commit to any financing, be sure to check all your available options.
At TechSperts Services, we’re always working hard to answer your questions and keep your IT systems trouble free. Contact us today!
Featured image credit: www.123rf.com