The availability of capital is crucial for small business startup, survival and growth. For entrepreneurs, getting a loan could mean the difference between success and failure, whether it’s used for renovation, purchasing equipment or working capital. Potential funding options for small businesses include the U.S. Small Business Administration loans, community banks and credit unions, microloans and alternative online lenders. Here is a look at some of the available options.
Community Development Financial Institutions (CDFIs)
Small loans of less than $50k for entrepreneurs who are typically ineligible for traditional bank loans.
Community Banks and Credit Unions
Smaller banks are key allies to small businesses with similar services as big banks but with higher loan approval rates.
SBA Loan Programs
The U.S. Small Business Administration’s (SBA) loan guarantee programs covers a variety of purposes, including start-ups, working capital, real estate, equipment and inventory.
Alternative online lenders
A new breed of online lenders are transforming financing options for small businesses.
Entrepreneurs raise funds by creating an online campaign and reaching out to the “crowd.”
Equity financing in which wealthy individuals invest their own money in startup ventures.
Equity financing for early-stage, high-growth startups with funds pooled from institutional investors.
Other Funding Options
- No-interest loans (yes, they exist!)
- A new development: crowdfunded, no-interest loans for small businesses.
- Business plan competitions.
- Cash awards to small businesses with stellar business plans.