Financing your small business may be frustrating if you lack the good credit required by traditional banks. There are other sources for funding. You just have perform a little research and be creative in finding the money you need for your start-up or existing business.
The recent credit crunch has caused banks and other traditional lenders to tighten their underwriting standards. Financing for start-up and small businesses has become more difficult to obtain. Now, more than ever, entrepreneurs have to be a little creative in seeking financing. If you are a business seeking financing here are few sources that may aid you in your search.
Angel Investor
Angel investors look to invest in businesses that return a higher profit than a traditional investment. Many angel investors are successful entrepreneurs who want to help other entrepreneurs get their business off the ground. Angel investors look for businesses which can successfully compete in an industry. Angel investors usually come at the stage of a business where some funding has been obtained but the business needs a significant amount more to get to the next level. Financing from an angel investor is usually expensive with costs ranging from 10 to 50 percent of a company's equity.
SBA
The SBA assists in obtaining a loan by guaranteeing the loan you get from a bank. Many banks have SBA loan centers and the process may even be streamlined where you do not have to wait long for an answer. The SBA is not a direct lender. Banks are willing to fund the business because the SBA backs the loan in case of default. The SBA guarantees up to 85% of a loan, depending on the size, type and maturity of the loan. There are several different types of SBA loan programs available.
Community Express Loans
Community Express is administered through the SBA loan program and is available at various selected lenders. This loan program is for pre-designated geographic areas serving mostly low and moderate income individuals and start-up small businesses. The program also includes technical and management assistance. This assistance is designed to help increase the chances of success for the small business.
Micro Business Loans
This loan program provides small loans to start-up, home-based and micro-businesses. Entrepreneurs with less than perfect credit needing to start or expand a business may benefit from a micro loan program. The loan does not come directly from the SBA. The SBA provides low-cost loans and grants to intermediaries such as community economic development centers which redistribute the funds to qualified small businesses in the form of micro business loans. You can borrow as little as $1,000 up to $35,000 and loans must be repaid within six years.
Patriot Express Business Loan
The SBA has launched a new loan program for military service members, veterans and their spouses called the Patriot Express Loan Initiative. The Patriot Express Loan builds on the more than $1 billion in loans the SBA guarantees annually for veteran-owned businesses. The loan can be used to establish or expand a small business and the maximum loan amount is $500,000.
Social Lending
Peer to peer lending is not only for personal loans but can also be used for business loans. This type of lending matches borrowers directly with lenders, circumventing the banks. It is a great alternative to traditional banks' stringent business loan requirements. With peer to peer lending, a typical loan could be funded by as many as 100 people, thereby increasing the chances your loan will get funded.
Friends and Family
Not surprisingly, more than 50% of all start-up costs for new entrepreneurs come from friends and family. America thrives on entrepreneurship and friends and family are a big source for start-up costs. If your credit is weak you may have little alternative but to seek a loan from a friend or family member. This form of lending has so evolved that there is now a website which will help you facilitate a loan between friends and family. http://www.virginmoney.com/
More resources can be found at: Business Loan Sources
Payment Reporting Builds Credit (
Having negative credit can affect your entire life. Not only are banks, lenders and credit card issuers pulling your credit file, employers are now using credit history as a determinant in hiring. You may be timely with your rent, utility, cable, cell phone, child support and even daycare obligations. Now you have an alternative way to prove your creditworthiness.
Navigating the Resurgence of Old Debts: Strategies to Handle Zombie Debt
In the shadows of the financial world, old debts can rise from the grave, haunting consumers with unexpected collection notices. This phenomenon, known as "zombie debt," can be a nightmare to deal with. Zombie debts are typically those that are past the statute of limitations, charged-off, included in bankruptcy, or debts that were never owed in the first place, possibly due to identity theft. As the debt buying industry has ballooned into a multi-billion dollar sector, it's crucial for consumers to be aware of their rights and the strategies to manage these resurrected obligations effectively.
9 Steps to Financial Freedom by Reducing Debt
Now, more than ever, managing and reducing debt is critical in staying afloat in today's society. Budgeting may sound painful but it does not have to be. Learn how a few simple steps to reduce debt can put extra money in your pocket.
