Cash Flow 7 Sources for Your Next Business Financing

7 Sources for Your Next Business Financing


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Being able to find sources of money for your business when you need it is important to the survival and growth of it. Some sources are more willing to lend you money than others, so it would pay to start with them. Other sources may prove to be a waste of time – depending on your company and its products, your success, and the amount of money you need.

Here are seven places you can get funding for your small business to take the next step.

1. Personal Finances

When small businesses need money, the most common method is to tap into your personal finances. Considerably more than half of them use their own money. This is usually the easiest place to get the needed cash, but if you borrow against your retirement accounts, you may find that you cannot repay the loan. Consider the potential risk before borrowing your own money.

2. Bank Loans

Your neighborhood bank has money for small businesses and they often provide lending for them. You will need to demonstrate good business sense and how you plan on using the money. You will also need to prove to the lender that you can repay the loan. Some type of collateral may be required but it is advisable that you do not use your home for it. You will need good credit to get a bank loan.

3. Friends and Family

If you know people with money, this could be a good source and many businesses rely on it. They are more likely to provide a loan for your business if it is sound and you have good business sense. They often provide loans for many business needs. Otherwise, you may need to form a partnership with them and let them help you guide the business.

4. SBA Loans

Government loans from the SBA are an excellent way to get business financing. The interest rates are often better than with some sources and the government encourages banks to lend money by providing backing for much of the loan. Shop around for the best prices because some banks charge higher interest rates. You will also find that the SBA requires banks to keep the part of the loan that is non-guaranteed.

5. State and Local Economic Development Organizations

These organizations are often flexible in their loans and payment arrangements. They will not give you the entire amount you need, but will often give you a sizable chunk of it. This can make it easier to get the rest. Your local chamber of commerce can help you find these programs.

6. Angel Investors

Angel investors can provide you with considerable money and often with a mentorship. You will need to have a special business to get it and you will have to surrender a portion of the business and equity in it. Most businesses do not qualify. You will also need to show a strong business sense and have a great business plan.

7. Alternative Lenders

Other sources are available to lend you the money you need for your business. Online lenders may be an excellent source of money but they often charge higher interest rates. An advantage in using them is that they often approve loans faster than a traditional bank – possibly within 24 hours. A good credit score is not always needed.

Other choices may include talking to your merchants and good customers. Borrowing from your 401(k) is a possibility, which is currently available without penalty if used for business and keeping good records.


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