Take Charge and Solve all Your Small Business Financial Woes

A startup is all about living your dream. A startup is about having a baby and then watching it grow. It is a whole lot of hard work. It tests your patience, but in the end nothing feels better than seeing your vision take shape. True, not every startup succeeds, but for every start-up that does not succeed, there are ten brilliant ideas that exist in the dormant stage without ever seeing the light of the sun. This happens because the ideators fear the financial demands of a start-up, or do not know where to garner the funds for their business.

Financial assistance forms a large part of the startup story. If you do not have a rich Uncle funding you, or investors queuing up for your idea, funds can pose a problem. However, one should know that nothing is impossible when there is passion, hard work, commitment and courage. There are various avenues of finance opening up for start-ups. In this post we discuss these sources, and how you can better tackle financial dilemmas in startups and small businesses.

Get Friends and Family on Board

We often underestimate the role friends and family can play in our professional life. Most outside investors will want to invest in your start-up once you have established some level of credibility. Seek help from friends and family for your startup.

Pitch your ideas to your friends and family. Do your practice run convincing them about your idea. If you can get them excited, and they agree to fund you in the early stages, the chances are higher that you will be able to get your investors excited in the later stages as well, and receive investor funding at later stages.

Bankruptcy Personal Loans

Falling into debts, and bankruptcy can often dissuade people from thinking of starting business or start-ups. While banks and government agencies may doubt your credibility, and not approve your loans, you don’t need to lose all hope. If you have a great idea and want to put it into action but struggle with obtaining credit, you can still obtain unsecured credit through certain providers. For example, Affirm Financial offers unsecured credit cards with a limit of $1000 to individuals who have gone through or are currently in a bankruptcy or consumer proposal. These types of credit cards can serve two purposes. First they can help you begin to rebuild your credit and begin to build stable payment history. Secondly, they can also serve as a small cushion to help with cashflow in your new business venture. Such loans and credit cards ease the finance acquiring process and helps the individual stand back on their feet, take care of his business, and gradually improve his credit rankings.

Small Business Administration Loans

The United States Small Business Administration is a federal agency that supports small business owners and individuals. They process loans to start-ups and small businesses that cannot receive loans from other traditional sources.

The Small Business Administration guarantees a portion of the loan and thus makes it easier for the start-ups and small businesses to obtain the financing they need.

The catch here however is that you will need to sign a personal guarantee to obtain an SBA loan. This increases the risk and liability stakes. What this personal guarantee implies is that you are personally liable for the obligation, and your lender can sue you if you default. Liens can be also be placed against your property.

Realistic Crowdfunding Solutions

For startup entrepreneurs or small business owners, crowdfunding becomes a realistic solutions to financial hurdles that crop up in initial stages of a business. You raise the funds directly from the public instead of finance giants like venture capitalists who are more likely to fund more established business. While crowdfunding websites like Kickstarter, Indiegogo and AngelList have made start-up ventures obtain their required amount and solve their financial woes, crowdfunding offers other benefits too to businesses.

Crowdfunding also puts you and your venture in the public eye thus getting your venture the much needed attention and validation. With advancement in technology, cloud computing outsourced coding, costs involved in a new venture have dropped drastically. Crowdfunding thus becomes a viable financing source in such a scenario.

Pawn Shops

This might surprise you a little bit, but pawn shops can still be a viable funding source for your initial business hiccups. Reuters news has stated that pawn shops are increasingly being used by small business owners for financial solutions.

Do your research. Besides the old school physical pawn shops, online pawn shops have come into existence as well. If you need quick cash and are willing to pawn something for the same, you do have a viable funding solution here.

Peer-to-Peer Funding

Small businesses can receive one to five year loans from other established businesses like Paypal and Lending Club. While this is not going to be a cheap alternative (read high interest rates), it is definitely a simple and workable option. You can apply online and find interested investors for your business.

Angel Investors

We do admit it is difficult to find angel investors for your business. However, do approach the right sources, and you may get lucky and get funded by an angel. Prominent companies like Google, Yahoo and Costco received funds from angel investors in their early stages.

Once you have managed to get an angel investor for yourself, your financing will become quicker, and the initial processes will flow smoothly. Besides angel investors also bring on board important business connections, tactical advice, sound knowledge and credibility to the venture.

To Conclude,

While the above solutions will definitely help solve financial obstacles faced by small businesses and start-up ventures, it is extremely important to ascertain the actual needs of small business, identify the bottlenecks and make a realistic trajectory for the business, so that it sustains and grows.

Korie Cantor is a finance addict, who blogs on all things finance- investment, entrepreneurship, fundraising and basic principles of steady finance. She possesses a great sense of style, and loves to share her thoughts on fashion and latest trends on lifestyle blogs