As a business owner, you are ought to acquire the knowledge of the various methods of financing available to gain the upper hand when making your business decisions for optimal results.
Retail Financing Options to Consider
Are you opening your first shop or the 50th? Knowledge in retail financing is imperative either way. Here’s what you need to consider:
Usage of Existing Revenue/ Assets- The smart way to deal with usage of existing revenue is to realize not to spend your current profit for business expansion at the cost of your expense.
Loans or Line of Credit Options
Long- term VS Short- term- Long- term loans are based on more than a year with monthly repayment options. While short- term loans span usually less than 12 months with higher interest rates and for businesses below $100,000.
Unsecured OR Secured- Secured loans require collateral such as real estate, heavy equipment or receivables while unsecured loans are credit based. Instead, a money judgment against you will be made in case of massive credit hit.
Lines of Credit - similar to credit cards, here you pay interest only on your outstanding balance.
Turning to Crowdfunding- Crowdfunding is one of the most advantageous funding options retailers are turning onto in the age of the Internet. With legendary examples of travail Kitchen & Amusements which gained $75,000 via a successful Kickstarter campaign eventually doubled their goal within hours. The key points to note about crowd funding include understanding the key tactics of customer engagement, dealing with backlash and engaging when your business caters to a large following.
Resources to Acquire Loan
Friends, Family and Loved Ones- Small and medium sized businesses (SMEs) often start with financial backing from friends and family.
Banks and Credit Unions- The most traditional loan options include banks and credit unions. Make sure you have a strong track record, proof of valuable assets and a strong financial security to qualify for the variety of loans provided here.
SBA Loans- As the government backs the Small Business Administration (SBA) loans, chances of approval are higher and therefore, less risky.
Alternatives- When all else fails, the alternative loan options you are faced with include the non- traditional sources such as Lending Club and the PayPal Working Capital.
Therefore, as financing smartly is undeniably crucial to your business gaining a deeper insight into the pool of financing options you are faced with helps you achieve a clearer perspective. As you now know the options, it is now time to conduct a thorough research of your finances and the sources you are considering to determine the right funding option for your business.