Beverlee Rasmussen CEC PCC Have you experienced any of these money situations?
- You need more inventory so you can make more money, but you need more money to buy supplies first.
- How about this? You want to hire another employee to grow your business, but you need a bigger budget so you can hire them.
- You need to run a new marketing campaign to bring in more sales, but first, you need the money to finance the campaign.
This double-sided coin is a common struggle for small business owners. Where can you get the money to finance your business so you can grow?
Hopefully, the list I’m about to share with you will help. Here are 7 of the best options to finance your business.
1. Federal, Provincial or State Small Business Loans
It took a pandemic for the world to realize how important small businesses are to our communities and global economies. This has resulted in a spike in government funding for small businesses. For example, in 2021 the Canadian government added $560 million to help small business owners in the Small Business Financing program.
Are you eligible for government loans in your region?
2. Unsecured Line of Credit
This funding option is suitable for smaller loans. Think somewhere between $5,000 and $10,000. People are usually quickly approved for an unsecured line of credit. This is because there are no assets or collateral needed for this loan. The downside to an unsecured line of credit is that it has a high-interest rate.
What perks does your bank have for business owners? Don’t be afraid to switch banks if someone else has a better offer.
3. Secured Line of Credit
This is different than an unsecured line of credit because you use your assets to secure the loan. With a secured line of credit, you will have a longer processing period as a bank needs more time to verify your assets. On the plus side, you’ll have access to lower interest rates, more money ($10,000+) and the option of paying monthly. This means you can pay back your loan in small chunks.
Are you confident in your ability to pay back your line of credit? If you default on a loan, your assets can be repossessed. This threatens the security of your family and home if the business doesn’t perform as you hoped.
For peace of mind, create a financial plan that confirms your ability to pay back the loan. Creating a plan will not only help you, but it will also act as proof of your company’s viability which will improve your chances of securing a loan in the first place.
4. Alternative Lending Programs
This is one of the best financing options for small businesses. Not only can these programs help you financially, often times they connect you to a community of like-minded people too. These types of programs vary and often aim to help specific groups. Such as students, women, First Nations and Indigenous people, youth, or people with disabilities.
Have you looked into government-funded programs? What about private programs put on by banks or cities?
5. Government Grants
There are a wide variety of government grants available to finance your small business. These grants are specific. So finding the right fit for you can be time-consuming. And once you find the right one, the application process is often lengthy. The good news is, once you secure a grant, the money is yours. No need to pay it back.
6. Suppliers
Did you know you can ask a creditor to loan you supplies? A creditor is a person or company that can loan you items, money or services.
Let’s say you want to sell branded t-shirts and you don’t have enough money to buy your inventory outright. You can ask a t-shirt production company to loan you some shirts on credit. Once you sell them, you pay back the supplier.
Heads up! Paying your debt back on time has the biggest effect on your credit rating. When accessing this funding option, be sure you can meet your creditor’s repayment terms on time.
7. Leasing
Leasing is great for when you need new equipment to grow your business. Vehicles, copying machines, heavy machinery and other types of equipment can be leased instead of purchased. Leases usually require that you have been in business for two years, but if you have a good credit score, you may well qualify.
How will you apply these financing options to your small business?
Has this elevated a bit of the stress around money? I’m confident that you can turn that “double-sided coin” into a prosperous business. (Which ironically can only happen with lots of coins!)
If you need any help, please reach out. Myself and the team at Systems Business Coach are here to help!
Until next time, enjoy your Entrepreneurial Journey!
