Running or even setting up a small business seems like a daunting task at first glance. From putting together a business plan to managing your social media presence, from handling the day-to-day accounting to making decisions about new product lines or services, there’s a lot of different factors that go into starting a small business successfully.
Perhaps the most difficult task in establishing your venture is securing funding. And although personal savings are a common source of initial funding for the small business owner, most aspiring entrepreneurs soon turn to other means of financing their small business. Business credit cards, loans from a bank, and SBA loans are all options that can help open up your cash flow so you can grow your small business.
Fortunately, if you are in Harrison, New York, you can obtain financing for your small business in more than one way. This small business financing guide can help you determine the best way for you to add to your working capital:
How Do I Finance a Small Business in Harrison?
While looking for financing your business in Harrison, you have the following options:
- Angel and Small Business Investors: These investors can provide thousands of dollars at a time when financing your small business idea. As such, they may expect a return in terms of profit sharing.
- Small Business Grants: These grants are provided by programs that could be funded by the state, a nonprofit organization, or an established business as a part of its social responsibility program. You do not have to repay these grants, but you must qualify against any rules that have been set by these organizations.
- Small Business Loans: These financing options are available through various vendors. If you contact a lender that works in approval with the U.S. Small Business Administration, then these SBA loans can come with preferential rates and friendlier repayment terms.
Before you could go about securing financing through any of these methods, you need to know exactly how they would affect your small business in the long run and what to expect from them.
Angel or Small Business Investors
An angel or small business investor usually helps an entrepreneur achieve their dreams by providing them with capital against a few set terms. If you are reaching out to such an investor, remember that in order to secure business financing through them, you will need to meet the following criteria:
- They have to like your business pitch.
- They may need to have a share in your business profit.
- They may want to be listed as a long-term partner in your small business.
- They may also want the rights to use your brand name in their own promotions and business.
These terms may vary from investor to investor. But keep in mind that some of these investors hold hundreds of meetings with aspiring entrepreneurs in a month, which makes it that much harder to qualify against their criteria and obtain financing from them.
Small Business Grants
Small business grants are hard to find in Harrison, and that much harder to obtain. With that being said, they are also the most ideal of business financing vehicles because you don’t have to repay the amount in terms of profits or business rights.
These grants often come from state-funded programs, but nonprofits and private organizations also offer them in Harrison. They have a set criterion of their own:
- They may need you to meet certain requirements individually.
- They may require your business to operate in a certain sector, such as agriculture, finance, or computing.
- They may need your application to compete with and win over other applicants.
There may be additional requirements to qualify for a small business grant. But this is the most beneficial way to obtain business financing from a perspective of profit. The hours that are sometimes put towards a business grant application may be quite extensive. Grant proceeds are not guaranteed.
Small Business Loans
Small business loans may be provided at certain terms. Some lenders take factors such as your personal credit score into account, while others may not pay as much attention to your credit rating but charge higher interest rates. Others will want to see proof that the business is profitable, such as your balance sheet.
A few things to keep in mind for this type of business financing are:
- You would need to be ready to repay your loan in the agreed upon terms.
- You would need to pay an interest rate on the approved financing amount.
- As the business owner, you may also need to have a good or excellent personal credit score.
- You could go for additional business banking products such as a line of credit, which could help you in controlling your interest and debt ratio.
The best way is to find a lender in Harrison that works in approval with the SBA. Such lenders have the capacity to offer friendlier repayment terms in regard to interest rates and repayment time frames in these SBA loans.
Small business loans are often also presented in the form of a line of credit. This means that once your application is processed, the financing amount approved for your business is set aside to be used on your own terms. With a line of credit, you only have to pay interest on the amount that you use, with the interest often being calculated in terms of daily average balance.
What is the Fastest Way to Secure Financing for Business in Harrison?
While you can try presenting your venture pitch to an angel or small business investor or apply for a grant, securing financing through a small business loan — whether through the SBA or private funding — is by far one of the easiest methods to obtain capital without having to share your profits with a third party.
Whether you are just about to start your small business or if you are currently looking to secure funding for an established business, don’t hesitate from reaching out to us today. With a variety of funding options for small businesses, we will be glad to answer any questions that you may have and help you secure financing.