Small business ownership is growing exponentially with a variety of driving forces behind launching a business, whether large or small. But on the road to success, most business owners run into the same obstacle — lack of funding.
In fact, 82 percent of small businesses fail due to cash flow problems. This mind-blowing statistic may make you wary about starting a home business. And the question remains, where can business owners get a surge of cash to boost growth or weather unforeseen problems?
Funding options for business owners can be tricky, but certainly achievable. Funding options that could keep your business afloat include friends and family, same day funding loans, and crowdfunding.
The following different types of business loans can serve as your quick guide to securing funding when you need it most. Let’s dive deeper into the top funding types that can catalyze business growth and success.
Family and Friends are One Funding Option for Businesses
Getting cash from family and friends is a common funding choice for entrepreneurs and small business owners. In fact, family and friends funding accounts for about $60 billion of all small business funding.
Cash flow from family and friends is a great option if they have it, and willing to give it to you. But there are few caveats, like having a business plan. Simply telling your mom, brother, cousin about your idea and asking for money may not close the deal.
When it comes to asking family and friends to shell out cash for your business, you should pitch with passion, but have projections and ROI at the ready as well.
Family and friends funding is definitely very easy and flexible, but it does have disadvantages. An overlooked disadvantage associated with this type of funding is taxes and the IRS.
The IRS can actually impute interest on the loans you receive from family and friends. This means you need to write up a “terms of agreement” document, apply interest, and set up a repayment schedule to be safe during tax season.
Get a Surge of Cash For Your Business With a Same Day Funding Loan
Business emergencies can arise at any moment. It could be an essential piece of equipment that fails, or a decrease in customers due to seasonal shifts. This makes having access to quick cash critical for business owners to stay operational. The good news is that there are types of business loans available that make it easy to obtain funding.
If you need a surge of funding to pay for repairs, weather seasonal shifts, or even expand when a great opportunity presents itself, a same day funding loan can help significantly. And it is very easy. It only takes a few minutes to fill out the required information, select a lender of your choice, and get funds deposited into your business account.
Same day funding loans are also short term loans, which means you will not be on the hook for a handful of years making interest payments. In the fast moving business world, having access to cash when you need it is vital, especially for small to medium sized business owners.
Crowdfunding is Certainly an Option for Business Owners
Crowdfunding is a useful funding option for business owners. You can connect with your target audience and also get the cash you need to grow your business and be a successful entrepreneur. How does crowdfunding work?
After you develop a stellar crowdfunding page, people interested in your product or service will donate/contribute in return for rewards you set up on your crowdfunding page and platform of choice. Sounds easy right? Not really, because developing and launching a crowdfunding campaign is a ton of work.
Successful crowdfunding campaigns often have enticing images, engaging videos, precise formatting, attractive awards, and social media marketing campaigns ready to support the page to increase online presence, reach, and maximum funding.
In conclusion . . .
A lack of funding can bring your business owner dreams to an abrupt end in less than five years of starting your business. This is due to the lack of capital your business most likely has, making big bank and SBA loans unreachable at the moment.
The good news is that you can enlist the help of your family, friends, social followers, target audience, and angel investors. What’s the key to finding the right funding option for your business? There simply isn’t one.
However, combining all of the top three funding options listed above will drive growth faster, opening up next level funding opportunities, like an SBA loan or venture capital funding.