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Financing Your Growth

 

The lending market is looking brighter in 2012, as we continue our recession recovery. That being said, finding loans with excellent rates is still a challenge for small business owners – even for individuals with the top credit scores. This year, you will need to be the resourceful squirrel who has buried nuts all over the landscape to get you through the credit crunch.


Crowd-Funding Sites

Remember canvassing the neighborhood to get pledges for your school walk-a-thon? Crowd-funding sites are the same concept, but taken online. One company was able to raise $1 million from 13,500 backers in one month. Sites like Kickstarter.com, IndieGoGo.com, and RocketHub.com can help you tap large pools of investors.


Retirement Fund Raiding

Companies like Benetrends, Guidant Financial and SDCooper can roll over your retirement savings into a new business or franchise, without the typical early withdrawal fees. According to Guidant, this method of financing has increased 25 percent in 2011 and is set to increase another 17 percent in 2012. This is a risky maneuver, since you could lose your nest egg, but if you have the confidence, it’s an option on the table.


Bank Loans

Bank funding for small businesses has dropped more than 10 percent since the recession began four years ago. There is essentially $71 Billion less for small business owners to tap. Yet, experts say that community banks are still a worthy source of lending. Smaller banks gave out more than $302 Billion in 2011, in fact.    


Small Business Administration Loans

SBA lending backed 61,689 loans totaling $30.5 Billion in 2011, which is the highest tally ever. This amount is nearly double what they paid out just two years prior. SBA loans, which are government-backed, are more attractive to banks that want to avoid risk. The SBA is a good option if you are looking for a large loan worth more than $250,000.


Venture Capital Firms

Venture capital firms made 2,725 investments worth $21.2 Billion in the first three quarters of 2011, which shows an increase from the $19.7 Billion they gave out in all of 2009. Yet, experts say that venture capital firms are likely to tighten the purse springs if Europe continues to have a rocky financial climate or if the US budget crisis is not resolved soon. 


Angel Investors

Like venture capital firms, angel investors are cautious about investing lots of money n startups. They doled out $8.9 Billion to 26,300 startups in the first half of 2011, which is up 5 percent from 2010, but isn’t likely to spike dramatically any time soon.  


Asset-Backed Loans

It’s become more popular to borrow against the value of a home, a yacht, or another tangible asset, especially for borrowers who may not have the best credit rating. However, like borrowing from one’s own retirement, this type of loan can be risky for the individual. Despite the risk, the Commercial Finance Association says 40.5 percent of businesses were using asset-backed credit lines in the third quarter of 2011 (up from 37.2 percent a year earlier).

 

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