Examples of a Financing Strategy for a Small Business

When it's time to expand your small business

When it's time to expand your small business, you need a solid financial strategy based on what your immediate and longer-term goals are. Understanding those goals and how urgently you need the money to achieve them will help you determine how to get the financing you need.

Bank Loans

Borrowing from a bank is a common way for small businesses to raise money. Most banks offer small business loan packages with interest rates that are higher than those for mortgages but lower than the rates attached to many credit cards. Bank loans typically come in two varieties -- direct loans or lines of credit. Both types usually require the business owner to secure the loan with collateral, such as the owner's home or commercial property.               

Credit Cards

If you're having trouble securing money from a bank, using your credit card might be an option. The danger with credit cards is high interest rates -- in many cases as much as 24 percent. Many credit card issuers offer lower rates if you ask or if you threaten to cancel your account. Talk to your creditor before using your credit card to expand your business.

Venture Capital

Akin to a bank loan is the venture capital, or angel investment, loan. With VC loans, you borrow a specific amount of money from a group of investors in exchange for an ownership interest in your business. "Inc." magazine has championed VC money, given that investors typically are experienced in specific fields and industries and offer their expertise to your business. Because of their stake in your business, VCs work hard to make sure it's a success.  

Have a Business Plan

If you are seeking loan from banks or venture capitalists, you will need to show the lender your business plan -- particularly if you are a startup. Business plans outline your goals, focus and mission, and they will influence how lenders view your monetary needs. The U.S. Small Business Administration devotes much space on its website to helping entrepreneurs develop a business plan that will draw investors.

Read the full article at:http://smallbusiness.chron.com/examples-financing-strategy-small-business-57893.html

Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.

Financial strategies for small business.

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