When trying to get your business off the ground and running successfully, you might be forced to pause if you’re struggling to find the funding you need. But there is plenty of help available, you just need to know where to look. So, to help you on your business journey, here are the top 3 business finance options available.
Business loans work similarly to any other loan, you borrow money from a lender and pay it back. However, there are a few differences that you should consider. When you apply for a business loan, your credit score will be checked. If you don’t have a score for your business yet, they may look at your personal one instead. If you have a low credit score, you might think you’re out of luck as your chances of being approved might be lowered. Having said that, you could look at bad credit loans. For example, if you’re in desperate need of new expensive farming equipment but have a low score, you could explore bad credit tractor financing. A bad credit score doesn’t always necessarily mean your application will be denied. Instead, you may face higher interest rates as you’re deemed a risk to lend to.
Some business loans allow you to use parts of your business like equipment as collateral. So, if you’re unable to make your monthly repayments, they can acquire the agreed item and sell it to cover their losses. Not all business loans follow this, and these are called unsecured loans. They work in the same way a personal loan would, without requiring collateral.
Another option for funding is allowing investors to provide you with finance. They could be what’s called “angel investors” who only provide you with a certain amount of money, and don’t request anything in return. Other investors will require some form of equity in your business, so you’ll lose part of the ownership. Going down the route of investors appeals to a lot of business owners as you don’t need to repay the money back. However, some owners don’t choose this route as they want to retain full ownership and be in full control of all the decisions made within their business.
Business Credit Cards
A credit card won’t let you finance your whole business, but you can use them for smaller purchases that you might not have been able to afford outright at the time. You might like to use a credit card for the day-to-day expenses of your business and then pay it off at the end of the month. Some business credit card providers will offer better deals and higher amounts of credit. Using a credit card can also help to build your business credit score as long as you pay it back on time.
Building a successful business can be reliant on if you have the right funding to really push through. Without additional funding, you might not be able to afford the smaller things like an emergency equipment repair, or the price of the professional coffee machine you’ll need to install before you even open.
There are many ways to finance your business and whether you choose a loan, overdraft, or any of the other options available, make sure you take the time to decide what’s best for your business. With careful consideration and exploring the avenues out there, you’ll find your business can go from strength to strength.
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