Because the market is already going through tough economic times, the banks are not in the mood to provide finance to more companies. As the chances to succeed in any business nowadays are at its lowest best, banks are trying to resist staking their money in new business ventures. So, as it is harder to approach for a bank loan, you can choose to get your business finance from other options that are available in multitude.
Equity: There are several investors still available in the markets who are interested in being a part of the next big thing. These investors are ready to give you funds with reasonable terms and conditions and lower interest rates. A huge number of new business owners have taken advantage of these investors and they can be easily found over the Internet through forums or even specialized websites.
Commercial loans: While applying for a commercial loan, you will need to go through extensive paper work including your financial statements, business plan, credit report, tax returns and incorporating documents. A commercial investor will evaluate your business on the basis of several factors including capital, character, capacity, collateral and conditions. While applying for such a loan, you will need to investigate a number of investors, to know about what kind of businesses they invest in and also compare their terms and rates of interest.
Small Business Administration loans: If you are not able to obtain commercial loan, then you can choose to apply for an SBA loan. You can apply for such a loan if you have tried to obtain a loan from conventional means but were unable to get it at reasonable terms. An SBA loan guarantees as much as 75% of the loan made by private lenders. As a business owner, you should guarantee the loan personally and demonstrate that the cash flow of your business is sufficient for the repayment of the loan.
Business plan competitions: These competitions prove to be a great source of capital for starting out a new business venture. This source of business funding has become quite popular over the past few years and several leading companies and universities carry out these competitions. You have to submit your business plan or executive summary and if you are selected, then you will be awarded funding for best business idea. Some of these competitions may have restrictions as per which you will need to be affiliated in some way.
With any of these business funding options on offer, you can easily avail finance for your business without even worrying about a bank loan.