By Evan Fischer
Whether you’re just starting out on your journey to open a business or you’re looking for ways to expand, one of the main criteria is cash-in-hand. Even the best ideas won’t get far without some capital to back them. And while it can be difficult in general to secure a business loan, the recession has made it even harder for those looking to get an enterprise off the ground. However, there are many options for the entrepreneurial soul that has an inspired idea and a solid business plan. Here are just a few ways that you might want to go about getting the startup funds you need to turn your professional dreams into a reality.
The first thing you should probably do is talk to your family and friends. If you really believe in your business idea, these are the people that are already emotionally invested in seeing you succeed, which means they might be willing to put their money where their mouth is. Of course, there is a downside to borrowing money from those closest to you; it could end in ruined relationships if you aren’t able to deliver on returns. But if you’ve done your homework and you’re confident about your chances of success, then your family and friends are likely to be a lot more forgiving than other lenders, offering you lower interest rates and letting you slide on payment while you get the ball rolling.
Of course, you might not be interested in mixing business and pleasure, so to speak, which leaves you back at square one. But don’t fret; there are plenty of other options. For most people, the most obvious first step is to seek a bank loan. The trick is to go about it in the right way. You need to look into banks that have a good track record of approving the type (and amount) of loan you’re looking for. If they’re familiar with the work you’re looking to do they may be more willing to back your enterprise. You should also talk to several representatives at the lender you ultimately choose. Finding someone that you click with is important since you may have to rely on this person to go to bat for you if things turn south.
If you can’t get a bank loan, there are still other options. If you’re already running a successful business, for example, and you have an idea that will vault you to the next level, you may be able to get venture capitalists on board. These firms are willing to put up beaucoup bucks if they think they can show a good return on investment. Just be prepared to deal with their meddling; they’ll definitely want control over how their money is handled. On the other hand, you could look into purchase order loan rates if you’re just need a small boost to fill a large order that promises to bring in more business down the road.
You may also want to seek out angel investors (who offer both money and mentorship to entrepreneurs within their own industry and community), small business grants (both government and private), or silent partners, just to name a few possibilities. All have the potential to provide you with the money you need to get started or expand your business. And while each comes with some drawbacks, you will likely find one that works just right for your particular operation.