You know the ins and outs of your business better than anyone. You’ve always got a finger on the financial pulse and know your clientele like the back of your hand.

The great thing about growth is that it’s just that — growth. You’re watching this thing you’ve poured so much of yourself into flourish, and that’s pretty sweet. But with growth often comes growing pains, and those can be, well, a total pain.

How do you keep up with the demands of an expanding business? How do you fund the changes necessary? No need to fret, we’ve got a few words of advice to help you along the way.

What funding options are right for small businesses?

Typically, when a small business needs additional funding, they opt for one of the following:

Bank loans, lines of credit and outside investors (aka, angel investors) have been popular among small businesses for quite some time — they’re the classics, if you will. For those who prefer to go the non-traditional route, crowdfunding (GoFundMe, etc.) has been growing in popularity over the years.

What are the pros and cons of each option?

There is no one-size-fits-all solution when it comes to funding your business, so we’ve broken down the pros and cons of the options we mentioned above.

SBA Loans

Pros

Businesses not typically eligible for traditional loans are more likely to qualify.

Loans up to $5 million are available, and interest rates are capped.

You don’t have to go through the process alone. There are resource centers you can turn to for assistance.

Cons

You’ll typically need to put in a 10-33% down payment, and collateral may be required.

The approval process can take some time.

Your credit score can interfere with your eligibility for an SBA loan.

Outside Investors

Pros

Networking opportunities come with the territory.

Support and guidance are bundled in with the funding.

The connections you make can lead to additional funding.

You don’t have to work around restrictions on start-up status, location, or industry.

There are no monthly payments and paperwork is minimal.

Cons

Availability comes at a who-you-know-basis.

Terms can be ambiguous and funding is on their timeline, meaning it may take longer than you’d like.

You may find yourself in a position where roles are unclear and founder control is reduced.

Crowdfunding

Pros

Low risk, (potentially) high reward.

You can avoid giving up equity in the company.

Strengthen your community and build centralized communication.

Difficulty getting noticed can interfere with campaign success.

Cons

Run the risk of exposure to scammers or imitators looking to replicate your product.

Crowdfunding platforms often come with high fees and strict rules.

Government Grants

Pros

They’re basically free money — no strings attached here.

There are tons of free resources out there to help you prepare for your application.

Cons

You’ve got to plead your case for approval and eligibility requirements can be strict.

Between submitting your application and waiting on approval, these grants are very time-consuming.

The competition is high. Hundreds of thousands of businesses apply each year, and there’s only so much to go around.

What should you consider before seeking funding?

There are plenty of factors to mull over before signing the dotted line.

What works for one business may not work for another. Here are a handful of questions to ask yourself to ensure the decision you make is the right one for your business.

Crunch the numbers.

Why do you need the funding? How soon will you need it? While an immediate option for funding would be to tap into available cash flow, it can be risky. Instead of penalizing what you have, it’s better to fund new products and initiatives with other sources of funding.
Surround yourself with good company.

Think of searching for funding like hosting a dinner party — when you start inviting people to the table, you’ve got to consider what kind of company you’ll keep. Do you need an investor that brings something more than just funds? Do they share the same vision as you? How can they help you accelerate your growth? At the end of the day, you want an accelerator, not an enabler.
Weigh your options.

Can you sustain immediate payments? Do you meet the qualifications for government assistance? There are pros and cons to every option, but identifying the pros that outweigh the cons is up to you.
Keep the end game front of mind.

Will this funding get you from point A to point B? How much decision-making power do you want to maintain? How would you handle external influences? When you have a clear picture of what lies ahead, you can make more knowledgeable moves to get there.
Think practically.

This one goes without saying, but timing is everything. What does your projected growth look like? Will you need funding to reach the next milestone? If so, how much and how will it be spent? If you’re considering taking on a loan simply because interest rates are good, you’ll want to dig deeper before making your next move.

Get funded and get going.

If you’ve made it to this point and you’re ready to make a move, we’re here to help.

We’ve got a variety of banking services designed with businesses just like yours in mind, and our team is here to help you every step of the way. Tap the chat icon on the left-hand side and get started today.

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Small Business Survival Guide: How businesses can score additional funding in a pinch

What funding options are right for small businesses?

What are the pros and cons of each option?

What should you consider before seeking funding?

Get funded and get going.