3 simple ways on how to fund a small business

3 simple ways on how to fund a small business

Unlike large businesses, small business doesn’t have sufficient capital to fund their business. In this article, we’ll wrap up the best ways on how to get working capital for my business.

Why working capital is required?

The money can be used to buy inventory, hire a new employee, start a new business, remodel a business, or to maintain day to day operations of the business.

Working capital finance

In this post, we have listed working capital loan options with respect to their cost and rate of interest and the most expensive alternative is listed on the top of the list.

SBA Loans– It is the cheapest source of working capital for small businesses. The SBA lending partners include banks, development organization, and micro financing institutions. There is various kinds of SBA loans, but the most common among them is 7A loan. The 7 A loan is used for buying a franchisee, refinancing a debt, real estate and  a lot more.

-Such loans require high amount of credit score approx. 680

– Extra collateral is required to fund the business

– Business experience is a perquisite

The only flaw of this loan is they are given to profitable organizations

Traditional Loans-the traditional loans are typical loans that are given by the banks or credit union to the business owners.

–Such loans require high amount of credit score approx. 680

– Extra collateral is required to fund the business

– Business experience is a perquisite

The only con of such loan is you need to have a good credit rating score.

Equipment Financing– It is a primary option for the business man who wants to buy equipment’s, vehicles and machinery.

-such loans require less amount of credit score as compared to later that is 600+

-there should be some proof of the business

The only con of such loans is start- up businesses or businesses with bad credit need to pay higher return.

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