By: Allbusiness
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1. Friends and family

A source for more than two in 10 entrepreneurs who want financing, friends and family have several advantages: They know you and trust you, so they’re likely to offer better terms than third-party lenders, as well as more flexibility if you run into problems and need more time to pay back the loan. However, it’s important not to take advantage of friends and family lenders. Always draw up loan papers, make sure the lender can afford to make the loan and be sure to pay the person back in full.

2. Credit cards

One-fourth of small business owners surveyed have used credit cards to access growth capital. Provided you use them correctly, credit cards can be a smart option. First, make sure you use a business credit card rather than your personal credit. By doing so, you help build a credit rating for your business and also keep your business and personal finances separate, which is important for tax and legal purposes. Second, make sure you are able to pay off the credit card in a timely fashion so that the cost of the capital is not too great.

3. SBA Microloans

The Small Business Administration recognizes that in order to achieve their goals, small businesses frequently need smaller amounts of capital than traditional bank loans typically offer. That’s why they started the Microloan program, which offers small loans of up to $50,000 (the average is about $13,000) to help small businesses grow. The loans are made through intermediary lenders—nonprofit community organizations that can often offer expertise in running a business as well as providing loans. Find out more about SBA Microloans.

4. Online lenders

Working with an online marketplace that matches your business with lenders can be a smart way to go if you aren’t sure where to turn for financing. In most cases, you’ll be able to choose from a wider variety of loan products than a traditional bank, you’ll usually get faster approval and there is less paperwork to deal with than a traditional bank loan. On the downside, some of these products have higher costs, fees and interest rates than traditional loans. However, if your business is relatively new without a strong track record, they can be your best bet for getting the financing you need to grow.

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