When personal funding or loans through family and friends are not an option for funding your new business venture it is time to look to other sources. There are several financing options available for starting a new business.
Using credit cards to start your business is one option, but can be very expensive due to the interest rates on your cards. Are you willing to pay the higher interest rates for the convenience of using credit cards to fund your business? You may want to exhaust other avenues before pursuing this one.
Another option would be to go the more traditional route, and go to your local bank to obtain a start-up loan. Most banks prefer to lend to established businesses, though, and tend to prefer not to give out “small†loans to new businesses. For the lower interest rates you can get from a bank for a small business loan, it is worth at least trying. Go in with your research and your business plan in hand. Know your market and your business projections. Be confident when talking about your business goals.
Peer-to-peer lending is another option. There are websites that put individual borrowers together with individual loaners. This option can be easier than some of the other options and may be the option that works for you.
Microloans are generally loans given out for less than $35,000 and are usually given to minorities, women, the poor, people with disabilities, or those who have had problems obtaining loans through traditional methods.
Last, but certainly not least, is the Small Business Administration. This organization offers a variety of loans to small businesses. If you are needed a large sum of money to start up your business, this may be the avenue for you. Loans given through the Small Business Administration are funded by commercial lenders.