Whether you are looking for start-up funding or trying to boost your business’s bottom line, finance options for business can be an important part of running a successful enterprise. Financing can come in the form of debt or equity, and each has their own pros and cons. Getting the right financing will help your business grow and thrive, while a poor choice could impair future growth and profitability.
Debt Capital: Often the first choice for most businesses, debt financing is straightforward and allows you to keep control of your company. However, it does require regular monthly payments to repay the loan over time. It also adds a known expense to your company’s cash flow model that is difficult to forecast accurately.
Equity Finance: As your company grows or reaches later stages of product development, you may want to consider equity financing, which can be more complex and offer more flexible terms than debt capital. These loans can be purchased with a percentage of the equity you own in your company, or you can sell your shares to the lender.
Grants: If you have a strong business plan and a sound track record, small business grants can be an excellent way to obtain capital for your startup or expansion. These can be a valuable source of capital that doesn’t have to be paid back, but you should be aware that you’ll likely have to compete for the best grants and that a small business is more attractive to investors if it has a well-written plan and a clear direction for how it will use the money.
Merchant Cash Advances: If you have a large credit score and are looking for a fast, low-risk source of funding, a merchant cash advance may be your best option. Unlike most other forms of credit, these loans usually don’t require collateral to secure the funds, and you can expect the funds to arrive in a matter of days rather than weeks or months.
Business Loan Brokers: Similar to mortgage brokers, a business loan broker works with a variety of lenders to try to find you the financing you need at the lowest cost possible. Choosing a business loan broker carefully is essential, and you should be sure to understand how their compensation will impact your decision.
A business loan marketplace: An online business loan marketplace uses your personal data to match you to lenders who work with borrowers like you, and it can help you compare funding options efficiently and quickly. A good business loan marketplace will also be able to provide you with competitive rates and repayment terms, as well as information about lenders’ background and reputation for approving loans.
Banks: The most common and familiar business financing option, banks require a solid business plan and a good track record before they will issue a loan. You will need to show that your business has been operating for at least a year and has profit and loss statements, cash flow budgets, and other financial documents.