I need money for my business, what are my available choices?
As an entrepreneur you have the following choices:
Personal, Family and Friends funds, these include savings, investments, retirement funds, credit cards, home equity loans, home equity lines of credit, etc.
Small Business Administration (SBA) guaranteed loans Lines of Credit and Term Loans.
The SBA guarantees a portion of the loan to the lender, so in case the borrower defaults, the lender can ask the SBA for the repayment of the guaranteed portion. (You are still responsible for the loan, so your obligation does not go away).
Commercial Loans: Lines of Credit and Terms Loans (without the SBA guarantee). Banks usually require businesses to be in operations for at least 2 years.
Alternative Lenders These organizations that specialize on clients with bad credit, no credit, or with a short credit history. Their loan amounts tend to be lower than a Commercial Bank.
Community Based Lenders These organizations work for a development of a community or in a defined area.
Asset Based Financing: Factoring, Purchase Order Financing, Equipment leasing, etc. The borrower will use account receivables, purchase orders, or other assets as collateral. The borrower does not need to be in business for 2 years since the financing company uses the buyers’ credit when assigning the loan.
Non-Bank Lenders These institutions do not conduct consumer banking but offer business services and business loans. Their requirements vary depending on the institution, and they may specialize in specific industries.
The Non-bank lender could take a longer time to process your loan application, but they can do deals that regular banks find to risky
Angels Investors These are high-net-worth individuals who invest in early-stage companies. They are usually former entrepreneurs who are now looking to invest as well as provide their expertise.
Venture Capital Venture capitalists raise money from investors in order to fund a portfolio of privately held companies for a profit.
