Do you need to get extra funding for your business? Sometimes all you need is a little more capital to make things run smoother.
Even though I have a home business, there are times I wish I had a little more capital. It would be nice, I think, to have a little extra breathing room so I can pay my virtual assistant or my podcast sound engineer.
No matter your business, if you’re looking for a little extra capital, you have options. Here are four ways to get extra funding for your business:
1. Small Business Line of Credit
One of the easiest ways to get extra funding for your business is with the help of a business line of credit. Like any other line of credit, a business credit line is a revolving form of credit. You have a maximum limit, and you can borrow up to that amount as needed. As you make payments, it frees up the capital again. It’s similar to a credit card.
I like to use a line of credit to smooth my cash flow. It’s a way to make sure you can meet all your obligations, even if a client pays late or you run into an unexpected emergency. In business (and in life), it’s all about your liquidity.
A business line of credit can take a little time to get set up, though. You go through a credit check, and the lender has to decide on a credit limit. However, once you are squared away, a business line of credit can provide that liquidity so your company keeps moving forward.
Another way to get extra funding for your business is through crowdfunding. I used Indiegogo to raise money when I was publishing my book, and it was a great way to pay the costs associated with putting it together.
You can use crowdfunding to quickly raise funds for your business. If you use a crowdfunding site that offers payment as you receive infusions, it can be one way to get cash almost instantly – as long as people are contributing to your campaign.
Another consideration is the rise of equity crowdfunding. It’s become more widely available since last year. It allows you to raise capital much the same way other businesses do, by offering interest in your company. It’s a more traditional funding arrangement, kind of like raising money from venture capitalists, only you end up with a larger base to draw from, rather than trying to convince one large investor.
As long as you understand the implications and the risks, it might work for you to use crowdfunding to raise the capital you need.
Finally, you can turn to installment loans to get extra funding for your business. These loans come in different flavors.
You can go the more traditional route and get SBA funding for your business. This can take a long time to get approval, and, depending on your business, it might be difficult to accomplish. I was able to get a line of credit for my business, but because I have a home freelancing business that I don’t plan to scale, getting traditional business financing is a little difficult.
You can also get person-to-person loans for your business. Companies like Lending Club allow you to raise funds from multiple donors at once in order to reach your funding goal. However, it can take quite some time to raise the funds and then see the disbursement. On top of that, if you don’t reach your goal for the loan, you won’t receive any of the money.
Don’t forget about friends and family. If you are fortunate enough to have a network to draw from, you might be able to get a loan from someone who will give you a lower rate.
4. Alternative Funding
Another option is to use alternative funding. There are sites that will let you essentially borrow against your invoices. If you have unpaid invoices, you can “clear” them immediately and get the money. You make payments (with interest) until you have repaid the amount cleared. You can use invoice factoring in a similar manner. Unfortunately, fees can be quite high when you use invoice clearing options.
PayPal has its Working Capital program that allows you to borrow money for a set up-front fee. Then you repay what you owe over time, with automatic payments coming out of what customers and clients pay you. This is a relatively painless way to get extra funding for your business. However, it operates like an installment account, so you don’t get the advantages of a line of credit.
In the end, what you use to get extra funding for your business depends on what you can get with your credit situation and business revenue. Options that are more lenient are likely to cost you more in the long run, so it’s important to weigh your interest charges with the benefit of receiving the needed capital.
This post was sponsored by Kabbage. All views expressed are entirely my own and were not influenced or directed by Kabbage.