This non-profit organization offers loans to women entrepreneurs and other smart ways to finance their business

Whether you’re starting a new company or have a long-time business owner, capital determines whether your company moves to the next phase, stalls, or closes its doors.

When it comes to raising money, I am an advocate for 100% ownership and equity options. However, bringing in a partner or investors may make more sense for you. If so, please note that Venture capital financing is not as accessible as people think.

The predominant path that most founders take to turn an idea into a business is quick start. Business consultant Lori williams Says: “Today’s startups have a wide variety of options, from traditional financing methods to microlenders and online crowdfunding platforms. While at one point, a business owner was simply communicating with their local bank, today’s entrepreneur must be vigilant in researching various available options and putting together a financing strategy. ”

Although not recommended, many use credit cards to get their business off the ground or to float their brand when needed. Making minimum payments on time is the foundation of responsible use of a credit card, but for a business, it’s good practice to pay as much as possible to have that line of credit open when needed. Aside from credit cards, there are more options available to get rudimentary and finance your business. Here are three unique financing options that I have used to scale my business.

A line of credit with a bank

A line of credit secured through a credit union is the cheapest money you will find. The interest rate is usually around 2.5%. Like any loan, there are specific criteria that a person must meet to qualify, such as good credit, having an established relationship with the financial institution, and collateral to secure their loan, usually a house or the exact amount in cash. This is where this concept can lose people. If you have the funds available, why not invest the amount in your business? Once those funds are used, the money runs out. But if you put the funds you had for your business into a line of credit, several things will happen: your personal money earns interest on a CD, a revolving amount of the total repaid is available, and (usually) when the terms are met nearing the end, banks will allow you to renegotiate and extend your terms. The initial periods are usually 12 to 24 months. As you build trust with a bank or credit union, you open the door to future financing options, such as obtaining a business loan, SBA loans, or factoring, if necessary. If you don’t have a significant amount of cash available for this option, consider creating a series through friends and family. Once you reach your goal, put that money into a line of credit with a local credit union.

Opportunity fund

When it comes to financing, Opportunity fund Community Development (the loan arm of Accion Opportunity Fund) is one of the best-kept secrets of loans. The nonprofit offers small business owners, particularly underserved groups, fixed-rate home equity loans of up to $ 100,000 in 45 states. They require borrowers to establish themselves as a business for at least one year.

“Even before the pandemic, women, immigrants and entrepreneurs of color received less funding overall and were charged higher rates when accessing funds for their small businesses. The past year has only deepened inequalities in who has easy access to financial resources, with Black, Latino, Asian and women-owned businesses suffering disproportionately. Action Opportunity Fund is determined to accelerate our investments that drive economic mobility by delivering affordable capital and responsible financial solutions to determined entrepreneurs. ” says Lindsay Chung, Opportunity Fund partnership manager.

Ecommerce Loan and Point of Sale Websites

Did you know that some of your favorite POS commerce platforms, like Shopify, offer financing options? These companies extend capital to companies that use their platform between $ 200 and $ 1,000,000. If your application is approved, the funds are deposited into your bank account generally within 2-5 business days, and instead of a fixed monthly payment, a percentage is deducted from each sale until the loan is fully repaid. To be eligible for a Shopify Capital loan, your store must have Shopify payments or other qualified third-party payment provider, have a low-risk profile, and be located in the US or Canada. Paypal and Square offer similar loans for business clients.

Regardless of age or size, the past year has impacted every business. Whether you need a microcredit to float your business for the next month or two or you need a large injection of capital to scale quickly, there are non-equity financing options available. Laura Azzalina Rigali, Outside CFO and Strategic Advisor to Entrepreneurs, says: “The silver lining to this difficult year is that there is more capital available for small businesses, and at record speed. Small businesses are receiving stimulus financing and emergency loans in a matter of weeks compared to the usual 6 months or more to go through a traditional loan approval process. Everyone in the financial community is eager to help businesses succeed, and there are many programs right now specifically designed to help quickly. ” . For more resources, contact your Small Business Development Center, SBA or Score to explore additional options available in your community.

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