Financial concerns can creep up on companies of all sizes and too much debt can of course become a serious problem for any business. But it remains very much the case that loans and other forms of finance are often essential to the prospects of SMEs in a wide variety of sectors.
Every small business owner sets out hoping to make good money, but it doesn’t always go that way—especially in the beginning. So the question becomes: How can you survive while your business gets on its feet?
Every startup needs access to capital, whether for funding product development, for initial rollout efforts, acquiring inventory, or paying that first employee. Most entrepreneurs think first of bank loans as the primary source of money, only to find out that banks are really the least likely benefactors for startups. Thus “creative” really means maximizing non-bank financing.
Finding loans to start a business can be time consuming and costly if you are not careful. While it does not usually actually cost anything to apply for a loan moneywise, it does cost time, and time is money.
In the US, many entrepreneurs see grants as “free money,” since they are not loans and don’t have to be repaid. A grant is not an equity investment, so the entrepreneur doesn’t have to give up a stake in the company either. Typically they can be used to fund product development and commercialization that would otherwise require outside investors.
There are some grants available even for one person shops, from cities, corporations and even non-profits for just your type of business, especially if you support a social cause, can employ more people, or help turn around a geographic area in need of upgrade.
Let me tell you the story of how I raised $100,000 to fill a gap needed to purchase a new home for my young family years ago. I had located a beautiful home that would be a stretch to finance, and had arranged for a first mortgage from the bank, and a second from the seller.
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