Small Business Financing: Exploring Credit Options for Growth

Whether you’re a budding entrepreneur or an established small business owner looking to expand, securing the necessary funds for your venture can be a daunting task. Fortunately, there are plenty of avenues you can explore to finance your dreams. 

From traditional bank loans to alternative options like crowdfunding, there are tons of ways you can choose from to expand your business financially. If you need help determining which is best for your business needs, you’ve come to the right place. 

In this blog, we’ll discuss alternative financing options small businesses can try and the benefits they offer. 

A Major Struggle

A recent survey from the Nevada Small Business Development Center (SBDC) revealed that many local small businesses struggle to secure financing. Of its 225 respondents, 58% say that finding capital is one of the three major challenges they faced when starting their business.

Although this has always been an issue for small businesses, it’s not always due to the lack of options. There are plenty of reasons some startups have a hard time getting the capital they need. 

For instance, some businesses don’t have enough collateral to secure their loans. In other cases, applicants don’t get the loan they want because of their poor business credit score. Fortunately, there are alternative options you can try.

Small Business Financing Options To Try Out

If you’re having trouble financing your small business, here are a few options you can explore:

Online Loans 

These days, you can find lenders online that offer loans for small businesses. Their limits and terms vary depending on their type and the lender offering them. 

Now, what makes online loans different? Online lenders may be more lenient than traditional banks. Additionally, some online loans feature fast-funding turn times, which means you’ll be able to access funds faster.

One disadvantage to this alternative financing option for small businesses is that they tend to have higher interest rates. You also have to think about the fees you’ll have to pay to secure your loan.

SBA Loans

If you want to secure funding for your small business in a more affordable way, we recommend you apply for a loan from the US Small Business Administration (SBA).

SBA loans come partially from the federal government, which makes banks more lenient with approving applicants. Even if the borrower seems to be a risky small business, most lenders accept their application since the federal government will guarantee a portion of the loan. 

To clarify, the SBA itself doesn’t issue loans. Instead, you need to look for an SBA-approved lender. The downside to SBA loans is that they’re hard to come by. 

Applicants must undergo a long process to qualify for this type of small business funding. If qualified, you can borrow up to $5 million. When it comes to repayment terms, some borrowers get terms for as long as 30 years. You could also get financing with a 10% down payment on your loan. 

Business Credit Cards

Business credit cards are one of the best and easiest ways to access funding for your small business. Not only is it so much easier to qualify for, but they’re also a great tool for establishing hour business credit. 

There are a ton of credit card options for small businesses. You can choose from various types, depending on your needs and wants. However, it’s important to remember that credit card interests are relatively high, even for qualified applicants.

If you want to use a business credit card for your small business, you need to learn how to use it wisely. 

Small Business Grants

What makes grants appealing to a lot of business owners is that you don’t have to repay them or give up some of your small business equity to secure them.

The only downside to this is that you will face steep competition. A lot of paperwork is involved in applying for a small business grant. Additionally, looking into grant opportunities can be extremely time-consuming. 

Invoice Factoring

If your small business provides products or services to another company, you can use invoice factoring to get more funding. Invoice factoring involves selling your outstanding invoices to a third party or a factoring company.

The company pays you a portion of your outstanding balance while they wait for your customers to pay their invoices. After deducing a factor fee, they’ll give you the remaining balance. 

What makes this alternative financing option is that it bridges the pay gap that stops most businesses from taking on new projects. With invoice factoring, you’ll get the cash flow you need to keep your operations running while you wait for your customers to pay you back. 

Crowdfunding

Crowdfunding is one of the most popular alternative financing options for small businesses. You can use platforms like Kickstarter and Indiegogo to gather small investments from different investors.

There are different types of crowdfunding you can do, such as:

• Debt Crowdfunding
• Equity Crowdfunding
• Reward Crowdfunding
• Donation Crowdfunding

It’s worth noting that each type comes with its own advantages and disadvantages. We also suggest you read the fine print of the platform you’ll use before signing and committing to anything.

Secure Financing For Your Small Business Today

With all these alternative financing options, finding the right one for your small business can be overwhelming. You need a knowledgeable and experienced partner to help you make the right call and keep the best interest of your business in mind. 

Secure financing for your small business with NCH. NCH is one of Nevada’s leading business formation service providers. With our expertise in business financing and commitment to supporting small businesses, our business specialists will provide you with all the guidance you need to succeed.

Unlock a world of opportunities for your business and contact us today. To learn more about our services, visit our website here or call us at 1-800-508-1729.

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.