Financing a small business is, for many entrepreneurs, the toughest part of the job. Mass amounts of time can be spent deciding whether or not to take out a loan, which loan is best, how to go about gaining it, and on and on. As every business and entrepreneur is incredibly unique, rather than giving a step-by-step instructional, we felt it would be better to compile all of the best resources we could find into one place as well as let you know of all the options available for financing.
We thought the best way to start out was to make foundational, clear-cut decisions. We’ve paraphrased some of the wisdom offered by fundera.com; you can read their entire article here.
Next, decide what type of loan is best for you. There are what feels like innumerable options, each hosting its own pros and cons. Are you looking for
- Inventory financing
- Business line of credit
- Small Business Administration (SBA) Loan
Because there are so many choices, we’ve included Nerd Wallet‘s handy small business loan comparison tool which can be accessed here. This tool will allow you to plug in the variables unique to you and your business, helping you to find the best option available.
Finally, decide what you can afford via these three steps:
- Calculate debt/coverage ratio
- Perform loan performance analysis
- Determine ideal loan payment
It’s important to know that acquiring a loan is not the only way to finance your business. You can also seek grants or fundraise using tools like Kickstarter.
Though financing can sometimes be stressful, we encourage you to keep pushing through. The pleasure of owning your own business, seeing it through, and leaving your mark on your community will always, in the end, outweigh the hardships. You’ve got this!