When it comes to securing growth capital, many small business owners freeze because they don’t know what to do. They don’t want to take out a loan or issue equity. Unfortunately, in many cases, a business is likely to become stagnant if they don’t inject some capital. The best option for loans is your local credit unions or independent banks. They are much more likely to fund a local operation and can offer you lower interest rates.
In this article, we’ll take a look at a few other options for growth capital for your business.
Investment by Owner
One of the first things to consider is this: is it possible for you, as the owner, to invest some of your own money? After all, if you’re looking into other funding, those sources are more likely to invest their money if you are willing to risk yours as well. If you believe in yourself, others are more likely to as well.
A venture capital firm is an entity that is willing to invest in small businesses on behalf of its clients. However, you must be willing to offer them a stake in the business. They usually provide large amounts of funding and are strongly interested in the direction the company is going. If you accept this funding, the firm will want a representative from their company to sit on your board. This is a great source of capital growth funds, but it also dilutes your stake in the company.
Angel investors are similar to venture capital firms, only they are individuals, not companies. They seek out specific investments with a mission that they believe in. Of course, they will also want to have a representative sitting on your board so they can offer advice. Plus, they often provide the business with a customer network and suppliers to grow the business. This will also dilute your stake in your company.
Finally, if all else fails, go for a loan. The bank isn’t going to tell you what you can and can’t do with the funds, like some of the other methods will. Plus, you maintain full ownership of your company.
You must have growth capital to put into the business to keep it from growing stagnant- consider the above options to help your business grow!
JHF Capital offers a wide range of financing solutions for businesses. Contact our offices today to learn more.