It is common to find small business owners hesitant about taking loans or issuing equity to help their businesses grow. However, without extra capital, business operations tend to stagnate. For loans and debt options, business owners can approach credit unions and independent community banks. You will find they are more interested in funding local operations and, at the same time, offer lower interest rates.
Owner Investment
Most people use their cash for growth capital. Hardly can you find a business owner who will obtain all the needed money from outside funding, especially when taking on new projects. Investing your own money in a business is a sign that you are confident in the success of that business. Therefore, any outside investor who sees a business owner has gone all-in will feel confident as well in investing.
Venture Capital Firms
These firms invest in small businesses in exchange for equity. Such firms will invest a huge amount of cash and significantly interest where the company is headed. Once you have accepted funding from them, they are likely to send their representative to be part of your board members. The advantage is that as a business owner, you do not have to worry about paying back loans or liabilities if the business doe not takes off.
Angel Investors
Angel investors are another source of growth capital. This group involves individuals or groups of wealthy people seeking certain investments. They will primarily invest in a business based on their opinion of your company’s goals. Angel investors are also likely to contribute to the board and offer advice from time to time. They will also help connect an owner with a network of suppliers and customers to help grow the business.
Borrowed Funds
Another way to get growth capital is through borrowing from traditional banks. Banks will neither monitor how the funds are spent or want part ownership of the business. However, when a business is taking longer to stabilize, debt repayments can hinder its success. Even when a company is going through a hard time, they still have to repay the loan, unlike equity.
Depending on the goals you have for your business, first, do some research on the different lenders and see who aligns with your vision. Whether you are looking to expand your business or restructure it, SV Financial can help you with the growth capital you need for the company.