How am I Going to Pay for This?
So you found a business you want to purchase. Most likely, you won't have the cash on hand to pay for it. So what do you do?
There are several options available for small business lending:
Small Business Administration (SBA) Loans: The SBA offers several loan programs, including the 7(a) loan program, which is the most common. These loans are guaranteed by the SBA, which makes them more accessible to small businesses.
Bank Loans: Banks and credit unions offer loans to small businesses, typically based on the creditworthiness of the borrower and the business's financial statements.
Online Lenders: There are many online lenders that offer loans to small businesses, including peer-to-peer lending platforms and alternative lenders. These loans may have higher interest rates than traditional bank loans but can be easier to qualify for.
Invoice Financing: Invoice financing allows small businesses to receive an advance on outstanding invoices. This can help with cash flow and is often used by businesses that have long payment cycles.
Microloans: Microloans are small loans typically offered by community development financial institutions (CDFIs). These loans are typically for amounts under $50,000 and may be easier to qualify for than larger loans.
Crowdfunding: Crowdfunding allows small businesses to raise money from a large number of people online. This can be an effective way to raise money for specific projects or to get started with a new business.
It's important to carefully consider the terms and requirements of each lending option before making a decision.