One of the primary needs of a small business is how to have access to money. Money is required to pay employees as well as vendors and rent for the building. Unfortunately, new businesses may have difficulty in accessing loans in the beginning in order to fund their business. There are a few options to consider besides a loan through a standard financial institution.
There are a few options that can be taken into consideration as primary sources of money in case a bank denies the loan. One main source of funds is friends and family. Family members who understand your business plans may be able to assist with additional funding. Family members may provide the money as a gift, a loan or an investment in the business. Depending on the situation, it is important to draft an agreement to avoid possible confusion in the future. A formal agreement can be drafted with the terms and conditions of the loan or gift the company’s records.
A local credit union is alternative way to access funds for a business. These organizations serve specific groups located in certain areas or employees of a company. Credit unions are similar to a bank, but may be able to provide better terms due to the applicant’s membership.
Government grants are another option to consider in financing the start-up of a business. Applications that are submitted through the government require personal as well as business information to review the business’ spending habits. The benefit of a grant is that the money does not have to be paid back.
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