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How to Navigate Your Funding Options for Business Growth

When you start a business, you may use some of your own money, but often, it doesn’t take long to realize it’s wiser to research funding options. Even if you save a lot of cash before launching your business, researching potential financing options for funding is an approach not to be overlooked. 

Financing can help you start your company effectively, provide cash to secure a workspace, buy equipment, or pay employees. You can determine which will work best for you by comparing these standard funding options. Our guest blog offers insights on ‘How to navigate your funding options for business growth.’

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How to Navigate Your Funding Options

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SBA Loans 

If you are in the beginning phase of starting a business and need financial support, the U.S. Small Business Administration should be the first place to look. The SBA offers business guides, funding programs, and resources to small businesses. The SBA also guarantees several loan types that might work for your business. SBA loans can be a wise first choice because they often offer longer terms and fewer requirements than a traditional bank loan. These loans can help you get the startup capital you need to run your business, even if you can’t qualify for a loan elsewhere. 

Bank Loans 

A bank loan may be a better choice if your business is established or you already have predictable revenue. Traditional bank loans come with various terms, depending on your revenue, credit, expenses, and other factors. Bank loans usually offer the lowest interest rates, especially for highly qualified candidates. You can use these loans to finance your regular expenses, buy equipment, or purchase commercial real estate. Requirements are typically higher than SBA loans, so you should evaluate your credit and debt before applying. 

Lines of Credit 

If you do not know your expenses or know that you will need to draw on the loan multiple times, a line of credit may make more sense. Unlike a term loan, a line of credit allows you to withdraw money for a specific period, after which you must start repayment. You only pay interest on the money you owe. Remember that the interest rate on a line of credit can fluctuate, so your monthly payments may change over time. If possible, attempt to lock in a steady rate.

Equity Financing 

Equity financing is a practical choice for business owners who prefer not to go into debt. This type of financing allows individuals or organizations to claim a portion of your company’s equity in exchange for funding. Venture capitalists usually evaluate up-and-coming businesses that are already making strides. Angel investors tend to focus on newer startups with great potential, as they can provide advice and mentorship in the early years. In either case, be prepared to provide detailed information about your business and its operations. 

Crowdfunding 

If you like the idea of others providing funding but aren’t sure you can meet the requirements of venture capital or other equity financing, you might consider crowdfunding. Crowdfunding involves requesting funding in small quantities, usually promising to provide a business-centered reward once you meet your funding goals. Although you can crowdfund by approaching family and friends individually, you can also make profiles on crowdfunding sites. Crowdfunding may be fickle, but it can be an effective way to combine funding and marketing efforts. 

Invoice Factoring 

When you need help paying bills between the completion of work and the payment of an invoice, invoice factoring could help. Invoice factoring involves selling an invoice as an asset in exchange for an advance payment of its value. Your business pays a fee for the service, and you receive a portion of the remaining money minus the advance and fees. Invoice factoring services are ideal for businesses that struggle to manage cash flow but have regular income to cover the costs. 

Conclusion: How to Navigate Your Funding Options for Business Growth

Running a business takes careful financial planning, and the proper funding can help. You can choose loans or funding that will help you achieve your business goals by evaluating your financing options, from SBA loans to invoice factoring. 

SOURCES: 

The Business Financing Roadmap Infographic

The Funding Family

Nerd Wallet: SBA Loans vs. Conventional Loans

Investopedia Financial Insights

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Sales Tips: How to Navigate Your Funding Options for Business Growth

1. Commit to your long-term vision for accomplishment(s) to stay on track and enjoy business success. 
2. Always keep the greater good of staff, team players, and your community in mind.
3. Ask trusted peers if they have researched funding to learn of their findings.
4. Create a list of possibilities after securing funding and compare it to not having it in place.
5. Never underestimate the novel ideas of anyone.
6. Listen carefully to advice to realize what may work best for you. 
7. Walk away from those who insult you and collaborate with those who show appreciation.
8. At the end of all communications, ask the other party or people if they have questions to ensure clarification.
9. ‘Don’t give up – find a better way!’
10. Celebrate Success!

Today’s insights are provided to help you achieve the Smooth Sale!

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