Growing a Business with Minimal Funding
Small businesses bore the brunt of the pandemic and forced them to close amid rising cases across the country. But some sectors continued to thrive, particularly the supermarkets, online entertainment sites, and food delivery services.
Even as a new variant of the virus is starting to spread across the world, businesses are wary about expanding. But industry analysts are saying it’s a good time to expand due to lower interest rates, a large pool of talent available in the market, and a shift is expected once the pandemic ends.
While expanding the whole business requires a good amount of funding, business owners can also take it one step at a time and acquire assets individually to help improve the services they offer. For instance, if business owners plan to acquire a vehicle but are worried about bad credit, they can look for car lots accepting bad credit history to purchase the vehicle. This way, the business can still grow despite struggling amid the current situation.
On the other hand, businesses also have several options if they want to obtain additional funding for their expansion plans.
The first option is through traditional lending. It is the best way to obtain funding to allow a business to expand. The requirements and processes followed by each lender are generally similar to each other. All the business has to do is to comply with all the requirements and submit all the necessary documents to take advantage of the loan.
Businesses can choose from the Small Business Administration loans offered by the U.S. government or get a loan from a regular bank. But it’s important to remember that banks are stricter when it comes to giving loans to businesses. With this in mind, business owners can look for the best deal they can get in the market.
Another option is the Small Business Lending Fund, which was set up to encourage economic growth in individual states. The fund is available to specific lenders pre-qualified by the US government.
Another source of funding is through grants. This option is quite challenging to acquire since the business should provide a good enough reason for the grant to be awarded. This means it can also be considered as an option to acquire funds for a business to expand.
The amount given through grants normally depends on the organization awarding it. For instance, the National Association for the Self-Employed offers grants of up to $4,000 for business expansion. On the other hand, the Small Business Innovation Research Program can give grants of up to $250,000.
Fintech (financial technology) lenders can also be considered when looking for a loan to fund business expansion. These lenders offer loans similar to the ones provided by the government and banks. Moreover, the terms of the loans are also similar.
The important thing to consider is to check the track record of these fintech institutions along with the services they offer and requirements for the loans. Some fintech lending institutions include PayPal, Lendio, and Kabbage.
Some institutions provide the funds as soon as all the requirements are submitted. On the other hand, other fintech institutions may take a long time to process the funding.
Another option to raise funds for the business is through crowdfunding. Crowdfunding is essentially raising funds for the business through contributions coming from a lot of people on the internet. It uses the network of people who are connected through social media. Many entrepreneurs and startups raise funds through this method.
But business owners should read the fine print on the agreement of these crowdfunding websites. Some of these websites compel business owners to reach their funding goal or else they will not get anything. On the other hand, other websites are more lenient, but get a bigger percentage of the amount raised as their fee.
Popular crowdfunding websites include Kickstarter, Patreon, Fundable, and Indiegogo. Each website has its own set of requirements and fees. Before business owners start a crowdfunding campaign, they should read the entire agreement so they will know what’s in store for them.
An angel investor or a private investor is a person or an organization that provides financial assistance to startups and businesses in exchange for equity in the company. One good thing about getting an angel investor to provide funding is that the business doesn’t have to pay back the investor. Instead, the investor will become a part-owner of the business.
If the business owner is willing to accept the angel investor as a part-owner of the company, then this is a good option to get additional funding for the company.
Business expansion at this point is quite challenging, especially if the business owner doesn’t have extra funds. But this can be resolved by getting outside fund sources to spur the growth of the business.
Meta Description: Expanding a business requires funding. But this is possible when the business receives outside funding. Find out how a business can raise funds to allow it to grow.
Infographic provided by Startup Loans USA, a business startup loans company