When it comes to seeking financing for your company, there are a lot of metrics that your company will have to meet in order for you to secure a more traditional bank loan. These loans typically include your business performance for the last few years, the creditworthiness of the company as well as their owners in some cases, and the potential for profitability that these banks perceive these companies will have in the future.
If you do not meet any of these standards there are other methods of financing, however, that does not involve having to give up equity in your company. Here are some of the best ones.
Merchant Cash Advance
The first thing to keep in mind is that a Merchant Cash Advance is different from a loan because in a loan — you have to pay both the principal amount as well as interest on that loan over time. Merchant Cash Advance is different because financial institutions will offer the business owners cash upfront and they will have to pay this money bank in staggered increments.
If you are a new company, getting an SBA loan is one of the best ideas that you can potentially resort to because the risk on your part is minimal. It is more difficult to qualify for an SBA loan but if you are qualified, partner financial institutions will very likely approve your application because these loans are guaranteed by the United States government. There are SBA7(a) loans that you can use for plenty of miscellaneous purposes, SBA 504 loans that you can use to buy fixed assets, or even SBA microloans that are available for smaller startups.
Personal Loans for Business
Other than more traditional business loans, you also have the option of getting a personal loan for your business. This is different from a business loan in that you can pretty much use the money that you receive from a business loan any way that you see fit. When it comes to personal loans for business, you have to use them in purchases and payments that only pertain to the operations of the company. These loans are rather difficult to obtain because they are usually bigger than the ones that you can secure through ordinary business loans which means that the criteria are also a lot more strict.
PPP Loans to Try
Another type of loan that owners can use to borrow for a small business is something called a PPP loan, or a Paycheck Protection Program loan. This loan is unique in this list because it is something that came about as a direct response to the economic fallout of the Covid-19 pandemic. These are some of the most flexible loans that you can find that are backed by the United States government and can even be forgiven if you are able to follow the terms of the loan correctly. These loans are intended for you to be able to pay your staff and keep your basic operations afloat while the US is still in a pandemic.
If this guide hopes to accomplish anything, it is for you to not give up on your aspirations of having your own successful business. It is understandable that securing funding is the most difficult step to accomplish in order for a business to get going so follow the tips that you learned about here and do your own independent research and there is a good chance that you will find the best option for you to get your business goals going.