Just because there’s a global pandemic doesn’t mean you can’t start a new business. Several new companies opened their doors in 2020 and even more, entrepreneurs want to follow their dreams in 2021. If you are worried about funding your business and your current financial situation, don’t be. You have several options at your disposal. Consider these solutions for your new restaurant, new store, or unique business plan.
Shop around for different loans.
If you don’t have a stellar credit score but need cash flow immediately, reach out to different financial institutions to see what loan terms they can offer you. By meeting with various lenders, you can find a good option based on your expected bottom line. Along with checking the interest rate, see what sort of collateral the lender experts, as well as the monthly payment you can expect. This can give you a full picture of their proposal.
Additionally, look for lenders who specialize in funding startups. Even if you lack good credit, these financing solutions can give you a low monthly payment and favorable interest rate — at least until your business gets off the ground.
Seek out specific equipment financing.
You don’t have to apply for a general loan or line of credit to finance your business. Instead, you can seek out niche financing options for specific items that you need. For example, restaurant equipment financing is used by many restaurant owners who need to stock their space with kitchen equipment and other key appliances. One piece of equipment (like a refrigerator) can cost thousands of dollars, creating a major business expense for business owners.
By seeking out restaurant equipment financing, an entrepreneur can follow his or her dream of opening a cafe or bistro even if they don’t have the immediate funds.
Bring on investors.
Along with reaching out to national funding companies, look around your network to find business partners who want to invest in your business. These investors can become partners who help with the day-to-day operations or remain mostly silent and sit on your board.
Each financier doesn’t have to contribute a lot of money to help you open your business. Even if a professional partner only contributes a few thousand dollars, that can give you the working capital you need to open your doors — or at least cover the down payment on your lease agreement.
If you do take on investors, make sure everyone is in agreement for what they will contribute, their level of involvement, and the repayment process. You may want to draw up legally-binding contracts before any money is exchanged.
Take out a business credit card.
If you aren’t sure about all of the expenses you need to open your business, look to take out a credit card specifically for business expenses. A credit card can give you working capital and allow you to pay it back on your time — just as long as you make the minimum payments.
Taking out a credit card (as opposed to a business loan or working capital loan) can also help during tax season. You can easily sort through all tax-deductible expenses and report them to the IRS so you pay less. While it is possible to do this with a loan, the digital nature of credit cards makes accounting easier. This is particularly true if you spend a lot of money on equipment purchases throughout the year.
You don’t have to choose one single way to finance your startup business. You might use your personal credit to secure a loan but then seek out investors and restaurant equipment financing to get your business running. Figure out the best options to help your new company thrive.