I’ve been working hard to develop my small business this year. First, I took an amazing 12-week women’s entrepreneurship course. Then I did the basics I’d never taken care of before: registered my business with the city, got an EIN, set up business bank accounts. Now I’m in the process of seeking funding. Unfortunately, I’m hitting a wall. It seems that I need to have money in order to get money. However, I’m not going to give up. Here’s what I plan to do next.
Personal vs. Business Credit as a Sole Properietor
I established my business as a sole proprietor. Since it’s a newly-registered business, I haven’t developed business credit yet. However, my personal credit comes into play. That’s both a positive and negative thing. On one hand, my credit score is good. On the other hand, I owe a lot of personal debt. This has been the biggest barrier to obtaining new business loans. Creditors don’t want to lend any more money to me because I already owe a lot.
Therefore, step one towards getting a business loan is to pay off my personal loans. I’m working hard to eradicate this debt. That said, it’s tough to make money when I can’t afford to do the things I need to do in order to grow my business. For example, I need to hire someone for a book project. That will bring in income and let me pay down debt. But I don’t have the money up front to pay them. That’s precisely why I need a business loan! So, this is a slow process.
Find The Right Places To Apply For Loans
One of the things I’ve learned through my entrepreneurship class is that you need to look for the right lenders. Specifically, I need to find lenders who want to work with pre-start-up and start-up businesses. If you go with a traditional lender, they consider the amount of time that you’ve been in business. As a new business, this counts against you. However, if you look for organizations that specifically want to work with people who are just starting out, then you’ll have better luck. There are fewer of these resources, but it’s about finding the right fit, not finding the most companies to work with. Therefore, I’m researching this area of small business.
Work Towards Grants, Not Loans
There are plenty of grants out there for women-owned small businesses. They might not be easy to obtain, but they’re out there. It’s a matter of researching to find the right ones then applying with all of the proper materials. I’m still learning a lot about how to do this. However, it seems like the best way to get the needed business funds when I don’t already have my own money to support loan repayments.
Whether Or Not To Crowdsource Funding
In this past I’ve used various crowdfunding tools to raise capital for my projects. I’ve experienced both pros and cons with this. It can be a great opportunity. However, it’s not an easy approach. At this time, I don’t think I have a clear enough proposal to feel comfortable crowdsourcing funding for my business. However, once I’m in the stage of developing a very specific product that offers tangible rewards to people, then I might reconsider this. The exception is that I do have a Patroon-Only blog for people who want to learn more about my research and support my work with monthly microdonations.
What are your tips for finding funding for a new small business? What are your biggest questions?
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Kathryn Vercillo is a professional writer who loves to live a balanced life. She appreciates a good work-life balance. She enjoys balance in her relationships and has worked hard to learn how to balance her finances to allow for a balanced life overall. Although she’s only blonde some of the time, she’s always striving for total balance. She’s excited to share what she’s learned with you and to discover more together along the way. Learn more about her at www.kathrynvercillo.com.