Four Ways of Funding Your Small Scale Business
Small businesses face various challenges in their growth but finding the best source of finance remains the first nightmare for most of them. A considerable percentage of starting businesses fail to reach the second stage of growth due to lack of finances. However, in the recent days, you can come across different sources of business finance, and you need to evaluate each one of them to determine the most suitable one for your needs. The following are four ways that your business can get funds to expand its operations.
Get money from online lenders – The internet bridges the gap between borrowers and money lenders, and you can find various online money lending sites that can help you during such times of need. With online money lending, there are few requirements as compared to brick and mortar banks. Additionally, it only takes a few minutes to approve the loan, and you will have it in your account ready for use. Interestingly, they have low-interest rates and a favorable repayment duration which is conducive to most small-scale businesses.
Crowdfunding – You can also decide to fund your business project by sourcing money from various people that you know. Crowdfunding is a cheap way of financing your business, and it is only viable if you have many followers on the social media. This type of business financing is gradually gaining popularity because it is less costly compared to others.
Payday lenders – Payday lenders are always available to provide short-term loans to people who need them. Nevertheless, if you choose this option, you must be careful to understand the terms and the rates applicable. Some of the cash advances and payday lenders have exorbitant interest rates that might make loan repayment cumbersome if you do not get the money in time. If you pick a payday lender hastily, you risk getting high-interest rates and huge penalties when you default.
Home equity loans – In some cases, if you own a home, you can use it as a security to secure a loan. This is always perceived as a risky undertaking by many pessimistic people, but you can do it and repay the amount in time. However, it is a viable source of finance as many business owners have exploited it and succeeded in making the payments in time.
From the four options above, you can scrutinize each and choose the most suitable one for your business requirements. Many people do not use the loans for business purposes, and that is why they fail to repay the loans. Maintain a strict repayment schedule as any defaults can lead to fines. Remember to invest the money in productive activities that can guarantee revenue generation and subsequent growth in business.
Attributed by: my response