The first, probably most obvious way is through a bank. These offer the lowest interest rates and already have the benefit of having established reputations as trustworthy lenders. Unfortunately, it can be challenging to get funding through a bank. The key is to be persistent and talk to every bank in the area. Being aggressive will increase your odds of getting a loan and with persistence, it’s just a matter of time before some bank comes through.
The key to being successful at getting a bank loan is to show past profitability and have a well thought-out plan for future profits. While this is great for existing businesses, it can be difficult for start-up companies that cannot show past profitability.
A second option is through the Small Business Administration. They can direct you to banks that offer loans guaranteed by the agency so that you’ll know the banks you’re approaching are interested in situations like yours. These loans place an increased emphasis on business plans, cash flow, and profit forecasts. The SBA can refer businesses to free counseling centers to help improve performance. A local branch should be contacted.
Lastly, there are online opportunities for small business loans. These alternative lenders will be individuals or small companies such as raisecapital.com and loans can range from $10,000 to $2 million. Interest rates range but are generally somewhere between what a bank would charge and what a credit card company would charge.
In looking for a small business funding, it’s important to explore all the options, be aggressive and persistent, and you’ll likely find your lender.