Financing Options For Small Business Owners
Whether you need funding to help your business grow or stay stable during a time of low cash-flow, find out about the many financing options available to small-business owners.
As a small-business owner or entrepreneur, you understand that one of your most important resources is money.
Investopedia reported that of the small businesses that fail each year, nearly half of the owners point to lack of funding as the reason for closing down. Receiving the right amount of financing when you need it is crucial for the longevity of your business, and understanding your options for receiving capital as a small-business owner is the first step.
If you need funding to keep your business running or growing, consider one of these resources:
Traditional business loan
If you're an established business with collateral and strong credit, NerdWallet recommends applying for a business loan at your local bank. Lenders will evaluate the financial data of your business and personal statements (like tax returns) to see if you qualify for the loan you need.
Local banks understand the benefit of economic development within their community, and as such they can be a great resource for securing a loan for your small business. Work with a trusted financial professional to understand the loan amount you could qualify for as well the documents you will need to submit.
Small Business Administration (SBA) loan
This type of bank loan is partially guaranteed by the U.S. Small Business Administration and is designed to help small businesses get essential financing with affordable terms. If your business is not yet well-established, or doesn't meet the sometimes strict lending criteria set by banks for their standard loans, SBA-backed financing could be a great option.
For example, in Colorado alone, nearly 90% of businesses may qualify for an SBA loan; it's not exclusively meant for startups like many owners think. Federal guidelines are in place to determine if your business is considered a "small business" and they will want to know what you plan to use the funds for.
Working with an experienced lender can help you navigate the application process.
An SBA loan is a great option for start-ups and established businesses.
Small business grant
While you have to pay back an SBA loan, a small business grant can provide you with funding without the need to repay in the future. The SBA offers grants for small business, though the criteria to qualify is strict.
Most small-business grants are reserved for nonprofits, businesses conducting technical research and certain entrepreneurs. Don't hesitate to see if your small business could be eligible for one of the many grants the SBA offers . Just make sure you can meet the legal and administrative requirements before applying.
Business Access loan
Business Access loans are ideal for small-businesses with a simple ownership structure. If you have small borrowing needs, these small loans are relatively easy to qualify and apply for to receive funding quickly.
Opening a business line of credit can serve a similar purpose. You can pay for what you need, and according to SCORE, it can help you even out cash flow . In periods where cash is tight, especially relevant for seasonal businesses, you can draw from the line and pay it down when business picks up again.
To learn more about financing options* for your small business, contact your local Vectra Bank representative today.
*Loans subject to credit approval. Terms and conditions apply. See banker for details.