Financing Options For Small Businesses

Although cash advances from merchants seem tempting when you’re short on cash, they are not the best option for small businesses. There are a range of other effective alternatives that are far less dangerous, however, and can really help your business when cash is needed.

Business Loan

Merchant cash loaners are often used due to their fast nature, and lenience on credit scores. However, the terms are far riskier, and businesses should consider a small business loan as an alternative. Although these loans require more paperwork, and are ultimately longer to apply for, the credit terms are much more reasonable, and is much more regulated. For companies that are worried about being denied due to their sub-par credit, Credit Unions may be the better option.

Investors and Venture Capital Firms

If the capital you seek is meant to start a business or to facilitate the growing pains of a startup, funding from outside investors or venture capitalists should be considered. The process of fundraising this way is very time consuming, and can quickly become overwhelming. Although investments from these types of investors typically mean handing over equity, or parts of your business as an exchange, this can be extremely beneficial as you also gain possible expertise, and a supporting network. Small Business Association’s (SBA) Investment Company program, allows small businesses to find lenders willing to support them, providing a sustainable, long-term capital option for small businesses.

Economic Development Programs

How you classify your business can also directly affect the financing you receive. This program rewards individuals with goals that reflect the economic development that the government is trying to push for. That is, woman-owned businesses and businesses located in economically disadvantaged locations may be eligible for unique opportunities. For more information on the programs and your eligibility, visit the SBA Website.

Government Grants

With a catalog of over 1,000 grants supported by government offices, associations, and various programs in the United States, Grants.gov is a great place for businesses to search for grants. Once signed up, businesses are able to search for grants by eligibility and category, with a consistent flow of awards posted each day.

Corporate Programs

There are some large companies out there that are willing to support smaller businesses that are struggling or starting up, with low-interest financing. Michelin is such a company that provides financing through Michelin Development. Although these corporate programs are more selective, and not an option for every single business, acceptance into such program at Michelin Development could provide up to $50,000 in loans at a 2% interest rate. Businesses owned by women and those operating in sub-par economic standards are the main targets for these programs.