Finding small business financing is not an impossibility.
There are some creative options that provide the same flexibility and opportunity as a conventional bank loan. You just need to know where to find them.
‘Out of the Box’ Small Business Financing Options
Here is a closer look at few financing options for you and your small business.
- Using Your Retirement Funds. A proven method for securing small business financing is to use your 401(k) retirement funds or IRA. If your business is structured as a C corporation, you can limit your personal liability to any funds directly invested into the business. Leveraging existing 401(k) retirement plans allows you to quickly access capital that can be converted into operating funds for your startup business. Using your 401(k) gives you quick access to funds, eliminates the need for applying for loans, and gives you full control of what is being invested and where, without interference from investors.
- Small Business Administration (SBA) Loan. The SBA offers loans for those who have been turned down by traditional lenders. Businesses need to meet certain criteria to qualify as a “small business” within their industry. Once approved, the borrower must apply for a commercial loan via a company that handles SBA loans.
- Crowdfunding. Crowdfunding is a way to reach nontraditional investors who are interested in supporting your venture. Depending on the platform, crowdfunding lets you set a specific goal and gives you a timeframe during which you can raise funds. Family, friends, and complete strangers can pledge certain amounts to support the effort. Usually, crowdfunding is best for short-term projects and could be helpful for start-up costs, but it is not usually a viable long-term funding strategy.
- Angel Investors. Like other venture capitalists, angel investors believe in helping younger companies get up and running. Angel investors, however, are usually anonymous. When pitching an angel investor, it is important to be clear and concise, offer an exit strategy, demonstrate expertise, have a unique idea that is not simply following a fad, and maintain contact.
- Microloan. A number of nonprofit organizations provide microloans in amounts from $500 to $35,000 to those with no credit history, collateral, or ability to gain a bank loan. These loans are ideal for small businesses looking to close a capital gap or needing funds to secure a contract.
- Bootstrapping. Also known as the do-it-yourself method, bootstrapping requires you to rely on your own funds, including personal savings, low- or zero-interest credit cards, or other personal assets such as retirement funds.
At Benetrends, we have worked closely with small business owners for decades. We provide the guidance and expertise for creating the right business structure and filing the right paperwork that gives you access to your 401(k) retirement plan funds.
With Benetrends, you get a proven partner who understands the dreams and desires you have for your small business. Let us help you understand the various funding options available and help your business get moving in the right direction. Act today and download The Definitive Guide To 401(k)/ROBS Business Funding to learn how Benetrends can help you on the path to small business success.