Tips for Raising Capital as an Established Business

For a small business, just getting enough capital to start can be a troublesome task; for those already established, the problems can be even greater. The good news is an established business has more options than one just starting out, but that doesn't mean it's any easier.

In your situation, a loan may be just what your company needs to expand and thrive. The very word can frighten any business owner, but in truth there's no business that has ever succeeded without first getting a loan from some source. You may not even have to use your bank, although you may want to first check with them to learn about their current offerings for small business loans. The SBA (Small Business Administration) also has certain loans for both new and expanding small businesses. To take advantage of these offerings, you need a solid business plan that firmly outlines your company and its potential for making a profit. The latter is especially important for any bank or other business to even consider lending you money.

If a small business loan is outside of your focus right now, you may want to consider a microloan from the SBA. You can only get a maximum of $35,000, but it's far easier to acquire than a full-blown small business loan. This is particularly useful if all you need is some updated equipment or other small capital to get your company through a rough spot. Collateral is important in a microloan, so most small business owners use it for equipment.

If your industry happens to fall into a manufacturing or other retail category, you can also look into something called supplier credit. Suppliers make their money when your purchase their products, but if you can't purchase anything until you make your own product, their business loses that money. In this case, many suppliers are willing to work with you. If they can't extend credit a couple of months, they may choose to take a percentage of the end product sales. This could prove more expensive than the interest from a regular loan, but it's an option when you're in a corner.

Finally, you can take a look at the home equity loans in your area, but you need to be cautious. They have lower interest rates than other loans, which make them a good choice for some people, but if your business doesn't fare as well as you had hoped, your home is suddenly at risk as well. If you've already personally invested a great deal in your business you might want to look elsewhere for your capital, but otherwise it may not be a bad idea. The biggest difference is that the procedure to seize your home will take longer with a home equity loan than a regular bank loan, but if you don't want to risk your home at all it's better to avoid a home equity loan altogether.