Understanding loan option for raising capital for business

1. 6 Options for Raising Capital for a Business

2. 1. Self-Funding If you have a new business or early-stage startup, it can be tough to raise funds. You don’t quite have the business or financial track record to show you’re a strong candidate for financing. That’s why many new entrepreneurs start with bootstrapping or self- funding. Self-funding is exactly as it sounds; you’re funding the business yourself with your own cash. That can mean tapping funds from savings or retirement (which isn’t necessarily advisable) or using your paycheck from your day job to fund your side enterprise. The downside is it may put you in a tight spot for a while until you get things off the ground. On the other hand, you have complete control over the business and aren’t beholden to potential investors. 2. Friends and Family If you have strong ties to your family and close personal and professional relationships, you can also raise capital for business purposes using friends and family. Friends and family may invest in your company as a gift, loan, or equity. According to the Securities and Exchange Commission (SEC), friends and family can help raise funds for a business, typically resulting in around $10,000 to $50,000. 3. Crowdfunding Another capital raising strategy is to use crowdfunding platforms to get funds for your business. You can tap your network and use the power of social media to get extra cash. Some crowdfunding platforms include: •Kickstarter •Fundable •StartEngine

3. Make sure to map out a plan for a social media campaign to make the most out of crowdfunding. You can also notify email subscribers and supporters to get the word out and provide gifts or rewards for contributions. This type of funding can be tough to get, but if you crack the code it can unleash outside support to get business capital. 4. Small Business Loans Raising money for a business can be challenging. However, if you have excellent credit and a solid business plan, small business loans may be a viable solution. Small business loans and financing come in many shapes and forms including: •Small Business Administration (SBA) loans: This government-backed entity supports small businesses through its various SBA loans, including 7a Loans, 504 Loans, and Microloans. Find out more on SBA.gov. •Term loans:Business owners can look into term loans from banks and online lenders, which offer straightforward terms and a lump sum amount. •Line of credit: A more flexible option that allows you to draw on available funds is a line of credit. Financial institutions typically approve you for an amount you can use. Based on the amount, you use what you need. When you repay the line of credit, the remaining credit line is available to you, similar to a credit card. •Business credit cards: To get fast funding, you can also turn to business credit cards. They’re not a traditional small business loan, but in times of need, they can cover any gaps. The bonus here is if you use your employer identification number (EIN), you can start building your business credit. Doing so may help you secure other forms of business capital down the line when you really need it. Whenever you’re borrowing money, take a close look at interest rates, fees, collateral requirements, and repayment terms. Also, understand how those monthly payments affect your cash flow. Taking out funding and not being able to repay it can backfire. Not only can it hurt your business, but it can also hurt your personal and business credit.

4. For more information go through our blog : https://www.biz2credit.com/bu siness-loan/options-raising- capital-for-business