It seems like a small business is always in need of a cash influx. Whether you’re looking to upgrade your office space, employ the latest marketing software, or buy more raw materials, every quarter of the business scenario calls for money. The good news is that there are lots of people and entities that you can turn to try to develop your financial options.
1. Venture Capitalists
Venture capitalists are always on the lookout for young, up-and-coming businesses with a high potential for growth and financial returns to invest in. Burgeoning businesses will sell ownership stakes to venture capitalists in exchange for technical support, financing, and managerial expertise.
These investors will roll up their sleeves and get involved in the day-to-day running of the business. They’ll bring their wisdom to bear by helping young business executives to make decisions that will drive growth. Venture capitalism is an alternative investment that is typically only available to institutional and accredited investors.
2. Angel Investors
This type of investor usually steps in when other backers are not prepared to declare a financial interest in a business and often back start-up businesses or entrepreneurs. Usually, the capital is given in exchange for convertible debt or ownership equity.
Angel investors are high-worth individuals, often family or friends of the entrepreneur. Generally, these investors have an eye on big returns that will be generated when the company that they invest in is sold to another company or goes public with an IPO. If the angel investor owned a percentage of the business, they’d take that percentage when the sale was made.
3. Microloans
These are usually reserved for nonprofits and are granted by institutions to individuals who wouldn’t normally qualify for a traditional bank loan. Rather than gifting a donation to the nonprofit, microloans enable people to invest in economic opportunities.
4. Vendor Financing
This is a form of short-term loan in which a vendor lends money to a borrower to be used to buy the vendor’s property or products. The interest rate is generally a bit higher in these loans because of the convenience and it generally signifies a standing relationship between the vendor and the borrower.
5. Crowdfunding
As far as fundraising technology goes, Crowdfunding has established itself with general acclaim. A lot of burgeoning entrepreneurs and inventors have utilized crowdfunding sites to kickstart a general fund for their ambitions. It has been proven to be a viable way to generate money for a new product or service. It has also been proven that if your clients believe in your brand and what it stands for, they will likely help you to try to meet your financial goals, especially if they see something out of it or they know that it’s going to be something noble or productive.
6. Small Business Administration (SBA)
Though the Hampton Inn Albany NY couldn’t qualify for an SBA loan, your small business probably can. Because the U.S. government has a stake in helping small businesses to succeed, it offers many types of SBA loans to young entrepreneurs. Loans can range from small to large and can be used for most business purposes, including operating capital and long-term fixed assets.
SBA loans have tight lending standards but they also offer low-interest rates and flexible terms, which make them a great option for start-up businesses. SBA eligibility requires that candidates’ businesses have fewer than 500 employees, less than 7.5 million in average revenue for the past three years, and a tangible net worth of less than $15 million.
Money can solve a lot of problems in the business world. It can help you to get the best employees, figure out what your customers want and improve your brand awareness. Generating money is at once difficult and important. Exploring your options is the best way for a small business to generate a capital influx that can set them on the road to future success.