Despite the economic recession and money becoming increasingly scarce, small business funding is still possible for the businessman if he knows where and how to obtain it. Before the entrepreneur begins, he should explore the possibility of self-funding his business by funding a part of the personal savings, instead of searching for the outside lending agencies. Before he considers that, he must be sure to seriously consider whether this type of personal risk is worth taking. Before investing the personal savings, the borrower should consult his family members as risking personal funds would affect them as well. He should also make sure that the amount of savings he can afford to invest is adequate as running a small business with insufficient funding can spell disaster.
The article below tells us about the small business funding options that are available to the borrower during a slow economy.
Mortgage Personal Assets
Assuming that the borrower is not able to do self-funding for whatever reasons, he must examine the second best option – that is borrowing money offering as a collateral of the personal assets like his property, stocks or bonds. If he can, the personal assets can serve as collateral for better loan terms.
Using Credit Cards
Credit card funding is considered as a viable option, in fact, many businesses are thus resorting to this kind of funding method. One would have to do some research as there are some credit cards that actually charge a low interest if the money is for funding of the small businesses. Before deciding on a credit card loan, one should be clear about the terms and the rate of the loan. He must take a look at the duration, the repayment plans, confidentiality agreement and all the other additional fee details.
Small Business Association (SBA)
One can contact the Small Business Association (SBA) or their associated agencies like the Small Business Development Centers (SBDC) in order to ascertain if there are any kind of government guaranteed loans which are applicable to the type of business. These types of loans are thus considered as very fast approval and funding options. One would typically know the status of his loan application within two days of applying for an SBA loan.
One can also inquire with the local banks in order to see if they offer small business loans. Local banks are however generally in favor of funding of the small businesses because of it, however, helps to increase their client base. If any of the local banks is willing to fund the small business, one should make them his first priority because the rates and terms would be good.
If the borrower is not averse to convert his small business into a partnership company, one can thus his business partner to partially fund the business. Of course, one must be willing to share the business profits in a mutually acceptable way. This should, however, be one of the last options the borrower should take because he would have to forfeit his absolute ownership of the business.
The borrower should make a list of all of the possible small business funding options and then he should prioritize them in a manner he deems fit. Starting first with the highest priority option which he can explore thoroughly each one of the options sequentially. Regardless of which option he finally chooses, he would have to spend a lot of time and do some in-depth research before he decides the right source for his small business funding.