There are lots of different options available for businesses looking for finance and it is important to choose the right one for you. Every business is unique and so are your funding needs. Below we have compiled a list of some of the most common financing options along with some info on each.
Banks
A bank is the traditional route businesses have used to get funding. They are able to grant loans to a wide variety of businesses and there is usually a set process to apply. That means there should not be any surprises. Plus, banks can offer low interest rates and they are not claiming a share of the business in exchange for the money.
The important thing to remember here is that you need to read the fine print and avoid some common pitfalls. Not all bank loans offer good interest rates and a loan will be heavily dependent on the quality of your application as well as your credit score.
Crowdfunding
This is a much newer way to raise funding and is often done online. The idea is to gather enough people willing to contribute small amounts of money to cover the entire amount you need for your loan. In return, these people get interest or a stake in the business.
The benefit to this form of fundraising is that it allows you to reach a large range of people who could be interested in your business. However, raising money can take some time if you use this method and you will have to work hard to get enough people interested.
Angel investors
These are wealthy people who are willing to trade investment in your business for a percentage of the company. They can bring valuable experience to your business and help you grow in your industry but if you accept their money, you will have to give up full control.
Venture capital
Venture capitalists are like angel investors but they usually invest much higher sums of money. They usually want to quickly grow the business so they can get a fast return on their investment. This can mean they offer lots of great help and opportunities. In return, they take a pretty significant percentage of the business.
Incubators and accelerators
This is more than just a loan, incubators and accelerators offer training, mentorship, and lots of guidance to help you grow your startup business. The only issue with this type of loan is that it can be very hard to qualify as the selection process is incredibly tough.
Specialist business loans
These are the types of loans provided by Idea Financial. They combine the flexibility of a traditional loan with the faster approval process of online options. These loans still come with some approval requirements but the application process has been streamlined.
Grant funding
There are a variety of grants available to businesses in the US. These are specifically designed to help small businesses so they can be just what you need. Better still, grants come with different terms than a loan so they could be quite a favorable option. There is a list of grants available here and you can also learn if you are eligible to apply.
We hope this helps you find the funding option you need to grow your business.
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