Options for financing your business

Are you the proud owner of a new business? If you are happy to call your small business your own, there are some things you need to work on in order to make it work effectively. You need to find a lender or an individual that will be able to provide you with business financing options. Business finance options are easy to find but getting the money isn't always as easy. How you get the loan depends on what your credit rating looks like as this is what creditors need to see in order to offer you the money but it's also dependant upon your small business plan and a few other factors. The best options for financing a business include the following:

• Banks
• Credit Unions
• Investors

There are some non-traditional ways of financing a business as sometimes banks and credit unions won't take the risk on you and you will need to use your credit card or a personal loan to start up your business. These are very risky options for financing a business, but it is a start and as long as you are building your personal credit and business credit, you should be able to qualify for future loans.

Work on building your business credit as this is one of the most important and best things you will be able to do for your business. Having a strong business credit rating is one way to show lenders that you are a strong company and that you are able to continue strengthening the business through loans from them and to show how you are planning to use the money. What can you do to establish business credit? It comes down to a few easy things like declaring a legal and legitimate business entity, opening a separate business bank account, acquiring your business license, etc. As you are able to create a separation of your business from your personal finances and other things, it will make it much easier for you to get a loan.

If you are still struggling to get lenders to provide you with a loan, there are a few other options that will be able to help you out with financing for your business:

• Financing through equity - a wonderful way to finance your business is by using the equity in your company to secure the loan you need for your company. There are some people that decide to use equity financing through their homes as they are able to take out $20,000 or more and put this money toward financing their business. However it won't allow you to keep your personal and business finances separate so it might not be the best option you have available.


• Debt financing - if you are ready to finance your business using debt, you need to be prepared to pay interest. With debt financing you must often bring up some type of collateral with you in order to secure the loan. Lenders need to see that you aren't going to provide them with a high risk, which is why they want to have collateral.


• Private financing - since some banks aren't offering loans, another option you have available is to opt for private financing. A private lender usually doesn't have the higher interest rates that you see with bank loans or they could be higher, but it's based on your lender along with collateral and what you are providing to the lender. Some of the private loans will come from your friends and family but you can also get them by talking to some of your vendors.