- Friends and family:
Going to friends and family for funding to grow your business is the most common way to finance a young company. Similar to venture capital, you exchange a percentage of ownership for funding but with the risk of tarnishing your close relationship.
- SRP – (Special Revolving Program)
These have always been attractive due to their low rates but require good credit and plenty of patience for the lengthy application process which can take approximately two to three months. Loans are focused on helping small businesses retain employees, cover payroll expenses and other expenses.
- Traditional Term Loans
This is a great low-cost option for mature and profitable businesses with great credit but unfortunately most small businesses don’t meet all of the necessary criteria. In addition to the high qualification standards, the terms may require your personal assets to be used as collateral.
- Venture Capital
To attract venture capital investors your business must have very high growth potential, an enormous addressable market and require a significant amount of capital to fund that growth. If your company is a fit for VC, be prepared to spend a good bit of time finding a partner. Since you’ll be giving up partial ownership of your business you want to make sure you find a partner that shares your vision and that your interests are aligned. While getting VC backing can typically take six months, in recessions VCs tend to invest less capital lengthening the process.
- Alternative Financing
AF provides growth capital to revenue-generating companies without giving up any equity. These are designed to deploy capital very quickly and offer more flexibility than traditional financing options
Invoice factoring – Businesses with long payment terms