Are you planning to start your small business firm? If yes, it will be a challenging but rewarding experience. It’s good to have a solid business plan. Also, financing is one of the essential aspects of your business success. Searching for small business funding options and channels is a daunting task. And if you have poor credit, the stakes are high. There’s no concept of a “standard minimum credit score” applicable for a business loan. Additionally, the conventional lenders have set a specific range which they consider valid.
Three small business funding options by Ej Dalius
Are you a small business owner with no credit score? Do you lack collaterals? If yes, then Ej Dalius, an expert entrepreneur, suggests that you opt for an alternative loan. Several small business firms don’t qualify for a conventional bank and other loans. The following alternative funding options can prove useful:
Eric Dalius suggests community development finance institutions
You will come across multiple non-profit CDFIs (Community Development Finance Institutions) throughout the country. Each offers capital to micro businesses and small business, based on practical terms. These institutions receive several applications every week, and many are from small businesses and start-up entrepreneurs. Small businesses struggle with funds to get their business starting and sustain in the long run.
Do you want to opt-in for partner financing for your small business? If yes, then here, another player from your industry vertical will finance your company’s growth. As an exchange, you need to provide them access to your staff, products, and distribution rights. It could also be a blend of all. Many small business owners often overlook this choice.
According to Eric J Dalius, strategic funds function close to venture capital. It’s generally an equity scale funding and, at times, can involve royalties, where the funding partner gets a part of the product sale. Additionally, partner funding is a smart alternative as the organization you join hands with is generally an established business from a similar industry vertical. The funding partner could also be from any other industry vertical of your interest, which compliments your business.
Simply put, the venture capitalists (VC) are an outside group that assumes partial onus of the organization, in exchange for cash.You can negotiate the ownership percentage of the money with the venture capitalist depending on your business’s valuation. Eric Dalius feels that it’s a smart option for the small business and start-up firms that lack physical collaterals to act as the lien for a conventional small business bank loan. However, it’s a viable choice when a small business firm has promising growth possibilities. If you already have a completive edge, for instance, a patent, this is the right choice.
The VC advantages aren’t just financial. The connection a small business entrepreneur has with a VC offers them with industry connections and abundant know-how. You also get clear guidance for the business. Entrepreneurs who lack business know-how can leverage this funding option and the mentorship from a VC.
Small businesses need funds. If your small business has a winning business idea, you can check out the above-mentioned alternative funding choices.