As a startup that has no to little business history, you might be wondering what are some of the fastest ways to obtain funding.
First of all, it is important for you to understand that since you are not going to have a lot of revenue to show, the most important factor that lenders will be looking at is your own personal creditworthiness. Personal credit scores and credit reports are tools that are used by banks and lenders to rate the creditworthiness of an individual.
Whether you are searching for additional funding in order to grow your business, or are still in the initial stages of getting your business started, be prepared to be creative and flexible. Keep in mind that your funding might not all come from a single source.
In fact, numerous small business owners and entrepreneurs piece together funding from a number of places and at different times. Another popular option for raising funds for a startup is to obtain funding from family and friends. The Global Entrepreneurship Monitor 2012 report showed that most (82 percent) startup funds came from friends, family or the entrepreneur’s own money.
Other than friends and family, the following are five fast ways to receive funding for your startup company:
Business Credit Cards – A very powerful type of funding to consider is an unsecured revolving line of credit that a business credit card can provide. That can not only help to keep your business and personal expenses separate, but it can also help you to build up the credit file of your business, provides flexible payment options, and offers access to credit and cash.
Microloans – It is faster and easier to get a microloan compared to obtaining a traditional business loan. Usually, amounts are less than $50K and many used for many different purposes including as working capital or to buy supplies, inventory, and equipment. The SBA works with a number of designated intermediary lenders located all over the country to offer small businesses with microloans. To find an intermediary lender near you, click here.
Crowdfunding – This is among the fastest ways for a business to cat a large net to attract investors. There are numerous crowdfunding sites that you can use, but make sure to do your homework first. It takes a lot of careful planning and preparation to have your crowdfunding campaign succeed.
Make sure you review the SBA’s crowdfunding introduction for entrepreneurs before you get started.
Credit from Vendors – The best uses of capital for business-to-business purposes is vendor credit and it is still the top alternative to small business and personal loans. According to the Small Business Administration, it is the single biggest small business lending source today in the United States. Startups can obtain access to short-term financing with minimal requirements from vendors.
This solution is invaluable since it offers businesses with the ability to purchase services and products that it needs to have upfront while still allowing them to defer payments (net 30 accounts) into the future.
Personal Business Loan – It can be an uphill battle and very time-consuming process to secure a traditional business loan, especially for startups. Pepperdine University recently conducted a study that showed that just 34% of small businesses obtained traditional funding through a bank, as compared to 75% of bigger businesses.
A personal business loan is made to you, as an individual and not your business, and is based on your own personal creditworthiness. Once the loan is approved, the funds can be used to help finance your business. Also, a personal loan often takes just a couple of days while a traditional business loan may take weeks to get a decision.
A type of personal loan often used is a title loan, find out how title loans work in California.
Whether or not you decide to use one or more of the above options, there is a good chance you will need access to them at some point as your business continues to grow. Having access to funding is critical for a business to succeed. It is the fuel that allows your business to run. So take the time to add one or several funding vehicles to your overall arsenal so that you will have access to additional capital whenever your business needs it.
