Small business owners know that the challenge of getting their businesses off the ground isn’t developing a concept, building a brand or drafting a business plan. Those aspects of entrepreneurship are easy compared to the challenge of securing the funding small businesses and startups need to keep their doors open during those first critical months and years. Without the proper resources behind them, small business owners and entrepreneurs may have the best ideas in the world but still watch their businesses flounder and die. That’s why securing the funding small businesses need to survive is one of the most important things entrepreneurs can do — as well as one of the most challenging.
That’s because there are so many funding options available to small businesses, each with unique pros and cons. What might be right for one type of small business under one set of circumstances may not be right for another type of small business under a different set of circumstances. It’s crucial for entrepreneurs not only to know all of the various funding options available to them, but also whether or not each of those options would be appropriate for their particular situation.
For example, establishing a small business line of credit might be a good option for some small businesses. It provides quick access to money with relatively small payments as well as the opportunity to build a business’s credit score with timely payments. On the other hand, however, a small business line of credit restricts a business’s ability to secure funding from other sources. Further, interest can build up quickly if the business is unable to make payments on time. Signing up for a business credit card is another funding option that gives small business owners the convenience of making purchases the same way they would use their personal credit cards. However, these typically are intended for smaller, day-to-day purchases and not the large capital expenditures countless small businesses need to make.
The following guide breaks down the positive and negative aspects of many of the most common types of funding options available to small businesses. If your small business could use a good source for the funding it needs, take a moment to consider all of your options and choose the one that will be best for your circumstances.
Joseph Brady is Senior Director of Digital Marketing for Reliant Funding, a provider of short-term working capital to small and mid-sized businesses nationwide. He has more than 14 years of experience in B2B digital marketing, optimization and operations, with a focus in the financial services market.