So you’re looking to finance your business and want to know where to start. Maybe you need startup funds, capital to expand, or money to get you through tough times. Whatever the reason, there’s a lot of options available to you these days, and it can be hard to navigate all of them.
Some of the best financial options are less obvious due to their newness in the market. We’ll go through the pros and cons of the best financing options available to you today, starting with the most traditional option: bank loans.
Bank Loans Are Viable but Highly Regulated
The problem with bank loans is how difficult they are to get. Your business usually needs solid credit and a proven track record to be considered. Not to mention, there’s a long application process. If your business is pretty well established and you have great credit, bank loans are a viable option. But if your credit is poor, you need money quickly, or your business is young, a bank loan may not be the right solution.
For many entrepreneurs, the next most common source of funding is their relatives.
Money from Family Members Can Be Problematic
First, here’s the good thing about money from family members—unless your family is a bunch of heartless oil barrens bent on squeezing pennies out of their posterity, you’re likely to get good terms on lent money.
Here are a few problems, though. Without a contract, your dear Aunt Augusta might think she should have veto power over your business decisions. Also, if your business fails, you’re putting family assets at risk. In addition, the IRS will want a piece of the loan, and you won’t build any credit from it.
It’s usually advisable to avoid family financing unless you work out a formal loan agreement.
SBA Loans Take Some Time but Offer Great Terms
Once you make it through the long application process, an SBA loan is an excellent financial product. SBA loans come complete with monthly payments, fixed interest rates, and generous repayment terms.
Lending Marketplaces Offer a Fast Solution for Small Businesses
We’re a little partial to lending marketplaces, but that’s just because we designed our lending platform as a way to bypass the problems with traditional lending. Here are a few reasons why a lending marketplace like Lendio is a good option:
Quick Application Process
Most lending marketplaces have an application process shorter than your lunch break. You enter a few important details about your company and the application takes off to be viewed by a bunch of lenders. Best of all, you don’t need great credit or much of a track record to start getting loan offers.
Lots of Loan Options
The variety of financing options available from lending marketplaces makes it easy to find a financial product that fits your needs. The products available often include:
Business lines of credit
Short term loans
Business term loans
Merchant cash advances
Business credit cards
Each of these loans has benefits that may fit your particular business needs. Find out which small business financing option is right for you.