When it comes to fueling business growth, many small business owners hesitate on issuing equity or taking out loans. However, without some kind of capital injection, many businesses will become stagnant. If you’re considering debt/loan obligations, you might want to talk to local credit unions and independent community banks, as they often have an interest in funding local operations. Additionally, they are often able to provide you with lower interest rates.
In this article, we’ll take a look at some ways to help your business reach new levels of success with growth capital.
Owner Investment
Small business owners are rarely able to obtain all the capital they need from external sources. At some point, they are most likely going to have to invest some of their own money. Of course, the benefit is that by showing a personal confidence in their business, they are more likely to get additional funding from external sources.
Venture Capital Firms
These institutions invest in new businesses on behalf of their clients. In exchange, the business provides the investors with equity. If you accept, they will probably want a representative from the firm to sit on your board. Offering equity in exchange for funding is great because you don’t have to worry about paying the loan back if the business doesn’t make it. However, it also dilutes your personal ownership in your company.
Angel Investors
An angel investor is a type of venture capital, but instead of a firm, it is a group of individuals who are looking for certain investments. Since they’re not a firm, they are more likely to invest based on their opinion of the company. They may also want to sit on the board or offer business advice. Again, your personal ownership in your company is diluted.
Borrowed Funds/Loans
Loans are a practical way to fund your small business growth. Typically, the bank is not going to tell you how to spend the money and you’re not giving away equity in your business in exchange for the money. However, having to make payments on the loan can make it difficult for your business to grow.
Conclusion
When it comes to business growth, there are several options that business owners can employ for funding. Ultimately, you must decide which one will work best for you. BT84 Commercial Capital & Business Solutions offers a wide range of growth funding programs. Contact our offices today to learn more.