Access to capital is one of the most pressing challenges for small businesses, especially during times of rapid growth. That makes the ability to find an affordable business loan and capital sources one of the keys to healthy growth and long-term success. But where can a small business go to get that much-needed capital in a pinch? Below we’ll look at three of the most popular options many businesses look to, and one that most small businesses rarely think about, despite the fact that it might be the best of all.
Bank Small Business Loans
Arguably the first place many small business owners will turn looking for small loans is the bank that they already do business with. There are certain advantages to the bank, the first of which is that you likely already have a relationship with them. The downside is that applying for traditional loans through local banks can come with higher barriers to entry than some other options, and you may be unable to secure financing if the bank sees too much risk or if you’re unable to back the requested amount adequately.
Depending on the type of financing you’re looking for, angel investors might represent another possible source of capital. Angel investors are usually well-off individuals that provide capital to startups, and while many will want equity in the company, there are some that provide loans (although they may require that debt to be convertible to equity at some point in the future.) Similarly, rather than going to angels, trusted family members can represent a good source for small loans, although it’s important to make sure any deals done with family are treated as professionally as they would be with an investor or bank.
Crowdsourcing is becoming a more and more popular source of funding in the digital age, especially for businesses looking to launch new products. Crowdsourcing essentially entails reaching out to your user base or your potential market and asking them to front the money for the business project you’re looking to finance. That often means an initial production run of products, but crowdsourcing has also been successfully used to generate initial capital for everything from artistic works to community projects and beyond.
Look to Your Payment Processor
One source of capital that many small businesses overlook – if they even know it exists – is support from their payment processors. Some payment processors, like BAMS, are integrated with small business lenders, enabling businesses to apply for and receive capital infusions with extreme ease and speed, thanks in part to their relationship with the processor. BAMS, for instance, is integrated directly with Fundomate, a leading small business loan, and cash advance provider. BAMS merchants can easily apply for loans of up to $500,000 with no collateral or personal guarantees required, at rates that are more affordable than 50% of alternative loan options. The Fundomate interface provides access to 20 pre-approved lenders, ensuring there is a financing option available for every company’s needs.
For more information on BAMS’ Fundomate integration and how partnering with BAMS for your payment processing can help you raise capital faster and at better rates, contact us today!