It’s not uncommon for small business owners to have to borrow money at some point in order for their business to stay afloat. Knowing this, there are a variety of financial and governmental options that small business owners can use to get the funds they need. While this is great news for some, it also generally means you will have to pay back that money with interest at some point. So to help make this process easier on you and your business, here are three tips for borrowing money to finance your small business.
Consider Online Lending
If you’re in need of money in a very short amount of time, traditional business loans may be too long of a process for you to have to go through. Luckily, bank loans are no longer the small business owner’s only options for borrowing money from an institution. According to Jennifer Post, a contributor to Business News Daily, online lending is now a real and legitimate way for small business owners to get the money they need in an expedited fashion. Post shares that an application for an online lender can take as little as one hour and you can get a decision regarding your loan within just a few days, making this option great for those in a tight spot.
Using Your Home As Collateral
When applying for a larger business loan, banks or other institutions will likely require you to have some kind of collateral as a form of insurance in loaning you the money. One item that could be considered collateral for you is your home. However, if you choose to use your home as collateral when borrowing money for your small business, make sure you’re aware of the risks you’re taking. Eric Markowitz, a contributor to Inc.com, writes that if you use your home for collateral and default on your loan, the lender could end up taking your home to cover the costs of your loan. Knowing these risks, be sure you speak to a financial advisor before you use your personal property in this way.
Know What Works With Crowdfunding
In today’s modern society, the Internet has made it easier than ever for startups or other small or struggling businesses to acquire funds without going through the previous formal channels. One way to do this is through crowdfunding. But Anna Johansson, a contributor to Business.com, shares that only specific types of businesses generally find success in this arena. Entrepreneurs with particularly sexy or novel products or services often find crowdfunding to be relatively successful for them. Also, if your business is “millennial-friendly”, you may have an easier time reaching your crowdfunding goals than businesses who don’t fit into this category.
If you’re wondering about how your business should go about borrowing money, use the tips mentioned above to help you find answers for yourself.