Most small businesses think of a bank when they need a loan. However, there are numerous types of loans that do not rely on a banker, for example a merchant loan. If you are a new entrepreneur, you will have trouble being funded by some conventional sources because there is not enough history to justify whether your business will succeed or not. However, you can still apply to other types of lenders like venture capitalists who are interested in brand new ideas that can become profitable with the right funding. If you are looking for business credit, look everywhere and you may find the money is available, just not through a bank.
Friends and Family
This is usually where a new entrepreneur looks for business funding. If your family is wealthy, it’s probably a great idea to tap this resource. If, however, you are trying to borrow of your parent’s retirement funds, that can cause future problems should the business not succeed.
Credit Unions
Credit unions do not make a whole lot of business loans, but that may change in the near future. They are trying to increase the limit on the amount of funding they can provide to business owners, but it still has to pass through Congress. When it does, make sure you are the first in line if you belong to a credit union to set up a line of credit for future use.
Mortgage Lenders
You can use your house as collateral for a home equity line of credit, if you still have equity in your home. You are taking on the risk that if the business fails you lose the house, however, that’s not an unusual risk for many business owners to shoulder.
Retirement Funds
You can cash out or borrow from your own retirement funds to get a business going, but only do it if you can afford to lose them. You don’t want to lose the business and have no retirement savings as you get older, too.