Starting a small business and running that business can be the most exciting and stressful thing a person ever does. But what happens when you want to start growing that business? Maybe there are some opportunities that you have strong data for, showing that it would be a great success – if you can just cover the cost of expansion first. The good news is that there are a number of options for financial funding of your small business. Here are a few financial funding options to consider:
Small Business Loans
Small business loans are one of the first things that most business owners think of when they need financial funding for expansion, growth or to cover the unexpected. Of course there are risks with getting any loan – if the expansion and growth plans do not pan out, you are still on the hook for paying off the loan. But if your data shows that you have a very strong path to success with the growth plans, then getting a loan can be a very smart way to take advantage of an opportunity. There are multiple types of loans depending on what you need to do, whether it’s buying more inventory, buying equipment, purchasing a new location, and more – so be sure to have your plans detailed carefully before you approach a lender.
The U.S. Small Business Administration (SBA) has a number of resources to look over available at SBA.gov. If you would rather just outline how much you need and have a service help you identify loan options, consider using a site like Fundera and see what recommendations come your way.
Don’t forget your local bank. No matter the phase of your business, it’s important to look at all of your funding options and visiting your local bank is often times overlooked but can turn out to be very beneficial as they know your local market and can be a great resource for your business.
Small Business Line of Credit
If you need a bit more freedom with your money for growing your business, one thing you can do is apply for a business credit card. All of the main credit card companies offer Small Business Cards. Mastercard, American Express and Visa all have a wide set of options to consider for business cards. You can also look over options at sites like NerdWallet.com where they’ll highlight the pros and cons of the varying business credit cards available. Business credit cards usually have much higher lines of credit than a personal credit card might, so that you can make real changes in your business, and typically offer spending reports so that you can track purchases for easier accounting. They also usually offer a variety of reward programs, so research carefully before choosing your credit card.
It’s also good to meet with a few local banks to see what options are available locally. No matter the phase of your business, it’s important to look at all of your funding options and visiting your local banks can be very beneficial as they know your local market and can be a great resource for your business.
Small Business Grants
If the idea of “free money” sounds like a nice day dream, you may be surprised to find that it actually does exist, in a way. There are many states that offer grants to small businesses specifically for growth and expansion. Grants are like loans, except they don’t need to be repaid. Usually, they are offered to small businesses that meet certain criteria that benefit the state or the grant organization. And they usually carry a caveat that the grant organization can dictate, somewhat, what the money is used for. For example, grant organizations can say that all the money must be spent on expansion only, not on any of your typical overhead – and receipts must be provided. If you can find a small business grant, you’ll be in luck, but they are rare and very competitive.
Some great resources include Grants.gov which can feel overwhelming but is actually a comprehensive database of all the government agency grants out there. If you get a grant it’s worth the work. You can also go to BusinessUSA and fill out a questionnaire and then be guided to grants available to you.
These three methods of finding financial funding for business expansion are great for different circumstances. Depending on how much freedom you need, how certain you are of success, or how lucky you get in finding funding, one of these routes could be your answer to scaling up your company.