Sources of Small Business Finance
Businesses are unique, and each has it set of challenges, but one hurdle that all small-scale businesses face is getting finances for expansion. A considerable percentage of starting businesses fail to reach the second stage of growth due to lack of finances. There are various sources of short-term finance that small business owners can access to boost their business performance and expansion. Below are four sources of finance available to small-scale businesses and you can scrutinize each one to determine its suitability for your business.
Get money from online lenders – The internet bridges the gap between borrowers and money lenders, and you can find various online money lending sites that can help you during such times of need. It is an advantageous option because it has minimal requirements unlike other sources of financing which might demand several things which proprietors might not have. Loan processing time is short, and after a few hours, you will have the money ready for use in your bank account. As an added advantage, the online money lenders have low-interest rates on their loans, and that makes it favorable for most small businesses.
Crowdfunding – If you have a huge following on social media, then you can use such magnitude of people to raise fund for your project. Crowdfunding is a cheap way of financing your business, and it is only viable if you have many followers on the social media. Despite the small amounts of money that each will contribute, the cumulative sum will be substantial and enough for your business needs.
Payday lenders – Payday lenders are always available to provide short-term loans to people who need them. Nevertheless, if you choose this option, you must be careful to understand the terms and the rates applicable. Some of the cash advances and payday lenders have exorbitant interest rates that might make loan repayment cumbersome if you do not get the money in time. Carefully scrutinize the term and conditions so that you do not cry foul when you default.
Home equity loans – In some cases, if you own a home, you can use it as a security to secure a loan. This is always perceived as a risky undertaking by many pessimistic people, but you can do it and repay the amount in time. However, it is a viable source of finance as many business owners have exploited it and succeeded in making the payments in time.
With many options available, you are free to get money from wherever you want to grow your business. Many people do not use the loans for business purposes, and that is why they fail to repay the loans. Timely loan repayment is critical to avoid penalties. Remember to invest the money in productive activities that can guarantee revenue generation and subsequent growth in business.