Enough has been said and done in 2019. Now, it’s time to move on and think about 2020. If you’re a small entrepreneur, then it’s time to know about various types of loans to expand your business.
The New Year is the perfect time to get the necessary funding for expanding your business. It helps to alleviate your stress level. If you receive a funding of $20,000, then you can use $10,000 for marketing your products. That may help to boost your profit. You can invest $5000 on the infrastructure and the rest $5000 for buying new raw materials. All these steps can help to kick-start your business on a good note in the initial months of the year.
Okay. It’s understood that extra funds can help to boost your business. But how can you get the extra funds? Where should you start?
Don’t panic. There are various types of business finance you can consider in 2020. Here are a few of them.
- Small business loans: These are the most popular type of business finance owing to low-interest rates and high approval rates. The approval process is quite easy. Hence most entrepreneurs try for small business loans first. Some lenders give the money within 48 hours. Now, that is quite fast. Some loans do have eligibility criteria. For instance:
(i) Your business is at least 6 months old
(ii) Your business turnover is $100k annually
(iii) Your credit score is at least 500.
Keep it in mind that a credit score does play a big role in the loan approval process. So, if several unpaid credit card bills are hurting your credit score, then find out effective ways to pay off credit card debt in 2020. Build a positive credit history to cross the 500 mark. Remember, the higher your credit score is, the better for you.
Suppose, your credit score is 490 due to delinquent debts. In that case, you just need to uplift your credit score by 10 points. In that case, one of the effective ways to pay off credit card debt is debt settlement. It can help you to eliminate debts quickly. Most people say credit card debt settlement hurts credit score. Well, that is true. But if your credit score is already below 500, then there is nothing much to lose for you. Plus, once you pay off debts, your credit utilization rate goes down, and your credit score goes up.
- Venture capital: It’s tough to expand your business being a sole proprietor. Perhaps this is the reason why you couldn’t go for business expansion in 2019. You need more skilled hands and knowledgable brains. Venture capitalists can give you sufficient funds for business expansion. But what do they expect in return? Well, nothing but a share or some form of ownership in your business. This is good for you. When 2 minds are at work, the result tends to be better. Venture capitalists can guide you on how to manage your business and reap profits in the long run. They can help your business to grow in leaps and bounds.
Initially, your heart may not be ready to share your baby with anyone – your first business venture. But think from a different angle. You’re new in the business and don’t have sufficient capital to expand it. Venture capitalists have been exploring the business world for a long time. So they know how business works and how to use money efficiently. Even one million dollars won’t be enough for your business if you don’t know how to use it properly.
- Angel investment: Sometimes, you need an angel in your life to fulfill your dreams. Angel investors can be that ‘angel’ in your life in 2020 and take your business to the next level with a huge amount of money. Angel investors provide money to startups when nobody is ready to invest. They also provide technical and operational knowledge to entrepreneurs. The only catch is, they want a good return on their investment.
If you’re unable to run your business smoothly due to lack of capital, then knock the doors of angel investors before anyone else does in 2020.
Last but not least
If your business is at a very early stage, then you can ask for financial support from your friends and family members. But in that case, you have to consider a few things. Can your friends lend you at the beginning of 2020? Are you willing to risk your relationship with them for the sake of your business? Are you confident that your business will do well enough to clear your debts? If your answers to all these questions are ‘yes’, then go ahead and borrow money from friends. This is the quickest way to fund your business with flexible terms and conditions.