Small Business Funding Options during a Slow Economy

Despite the economic recession and money becoming increasingly scarce, small business funding is still possible if you know where and how to obtain it. Before you begin, you should explore the possibility of self-funding your business by funding a part of your personal savings, instead of searching for outside lending agencies. Before you consider that, be sure to seriously consider whether this type of personal risk is worth taking.  efore investing your personal savings, you should consult your family members as risking personal funds will affect them as well. You should also make sure that the amount of savings you can afford to invest is adequate as running a small business with insufficient funding can spell disaster.

Mortgage Personal Assets

Assuming you are not able to do self-funding for whatever reasons, examine the second best option – that is borrowing money offering as collateral personal assets like your property, stocks or bonds. If you can, your personal assets can serve as collateral for better loan terms. Again, you should be sure you want to risk your personal assets for your small business and you are willing to lose that asset.

Using Credit Cards

Credit card funding is a viable option, in fact many businesses are resorting to this funding method. You will have to do some research as there are some credit cards that charge a low interest if the money is for funding small businesses. Before deciding on a credit card loan, you should be clear about the terms and rate of the loan. Take a look at the duration, the repayment plans, confidentiality agreement and all other additional fee details.

Small Business Association (SBA)

You can contact Small Business Association (SBA) or their associated agencies like the Small Business Development Centers (SBDC) to ascertain if there are any government guaranteed loans applicable to your type of business. These types of loans are very fast approval and funding options. You will typically know the status of your loan application within two days of applying for an SBA loan.

Bank Loans

You can also inquire with the local banks to see if they offer small business loans. Local banks are generally in favor of funding small businesses because it helps increase their client base. If any local bank is willing to fund your small business, you should make them your first priority because the rates and terms will be good.

Partners

If you are not averse to converting your small business into a partnership company, you can expect your business partner to partially fund the business.  Of course, you must be willing to share the business profits in a mutually acceptable way. This should be one of the last options you should take because you will have to forfeit your absolute ownership of the business.

Make a list of all of the possible small business funding options and prioritize them in a manner you deem fit. Starting first with the highest priority option you can explore thoroughly each one of the options sequentially. Regardless which option you finally choose, you will have to spend a lot of time and do some in-depth research before deciding the right source for your small business funding.

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