Six Ways to Finance your Small Business

You’ve got a great business idea, you’re motivated, customers are waiting and the supply chain is in place. But you can’t make progress because the bank wants more collateral, or a revised business plan, or, maybe they won’t even talk with you. Take a look at these Six Ways to Finance your Small Business.

What options does a small or mid-sized company (SMB) have when they can’t get funding from big banks to fuel their launch, expand their business or just stay competitive?

Fortunately, there are a growing number of opportunities for SMBs to finance their businesses without dealing with restrictive and inflexible banks.

1. Self-financing – Obviously, if you had the money, you would have used it to finance your business already. But even when you don’t think you have the money, or don’t want to put your savings at risk, you still have several options for self-financing:

  • Credit cards – Exorbitant interest rates usually eliminate credit cards as a viable financing option. But there are three reasons to reconsider them: First, a growing number of low-interest credit cards are available that give you instant access to funds at surprisingly low interest rates and annual fees; Second, if you pay your credit card balance each month, you pay no interest. It’s like getting a short-term interest-free loan; Lastly, you can take advantage of all those “interest-free” offers you get to try a new card.
  • Line of Credit – Your personal line-of-credit is a good source of long-term financing at better rates than most credit cards.
  • Home equity loans – It’s never advisable to put your home at risk to fund a business venture. If, however, the investment is sound, leveraging your home equity can be a great way to get a large amount of money for your business.
  • Whole-life insurance policies – Depending on your policy and insurance company, you can probably borrow against the cash value of your whole life insurance policy.
2. Crowd funding – The internet changes the way most companies do business—including business financing. With access to massive numbers of people, if you are able to convince just a relative few that your business or product idea is good enough, you can quickly and relatively easily generate a lot of interest-free financing.

3. Factoring – There’s perhaps nothing more frustrating for SMB owners than to have healthy receivables, but not the cash needed to implement their business plan. Factoring, also know as a merchant cash advance, is the selling of those receivables at a discount to get the cash sooner than later.

4. Government & private grants, subsidies and rebates – If you’re ready for a little research and paperwork, different levels of government offer grants, loans and tax incentives for a number of business investments and initiatives. Many private companies also offer grants and funding for certain types of projects, including work related to their business, industry or cause.

5. Private investors – Finding an angel investor or venture capitalists can be an option, but using them will often mean giving up a share of your business in exchange for the funds.

6. Independent finance companies – Popular with small business owners who want the security and lending power of a financial institution without the hassle or stress of a bank, independent finance companies are more customer-focused than traditional banks.

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Are you a small business looking for SME Funding and Support in Ireland? Click below for a complete list of supports.

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