In days past a handshake with your banker was all that it took to obtain financing to start a business or to obtain a loan for your existing business. In today’s environment it can be very challenging to obtain any loan. But there will likely come a time when you need additional capital. Keeping that in mind, the following is a list of ideas that may work for you and your business.
1. Get a Bank Loan
Because lending standards have tightened you will need a business plan and projected revenues and expenses for your new business and at least an executive summary and current financials if you have an existing business. Many lenders will use the SBA program to guarantee your loan and reduce the risk for the lender which will increase your chances of securing a loan.
2. Ask Family and Friends
There is no harm in asking; and family and friends may want to help. Make sure you treat this as business, show them a formal business plan and explain how you intend to pay them back. You need to tell them about the risks involved, how you will pay them back and secure the loan with a note. After all your family will always be there.
3. Check your 401 k
You may be able to tap into your 401 k without penalty. You will need to set up a corporation and someone with experience to set this up such as an attorney or CPA.
4. Credit Cards
You can use a credit card but this can be risky business. Pay the minimum monthly and it can take you years to pay this off. However used responsibly it can get you out of a jam.
There are investors out there and they look for certain types of business. They will want you to know your business. They too will want a business plan, financial information and market analysis.
The options listed above are the historical go-to methods for obtaining capital for your business. Next week, part two of this article will explore other ideas for finding money to grow or start your business. See you then!
Marge Cirillo has entrepreneurial experience that includes owning and operating three highly successful restaurants and catering service for eight years. After selling the restaurants she went to work for the SBA Disaster Team as a loan specialist. She has also worked for Certified Development Companies as an underwriter and marketer of the SBA 504 Loan program. Before joining the SBDC Marge was an Assistant Vice President at a community bank specializing in SBA lending. She now serves as the SBDC liaison in St. Johns County.