A bank loan is where most small business owners try to obtain working capital for growth or business operations. However, this traditional source of working capital has been, and continues to be rather unavailable to small businesses. A recent study has shown that 45% of small businesses had to transfer personal assets to their business, 56% of small business are denied bank loans, and, 78% of small businesses consider it difficult to raise financing for debt.
Even in a healthy economy, it can be difficult to obtain working capital for a business. Many small business owners don’t have a solid credit history or operating experience. These days, the lending environment is tight, which makes it even more difficult for small business owners to raise the working capital required to grow and operate their businesses.
However, there are alternative sources of working capital available to small business owners. Small business owners simply need to identify their resources and be open to innovative and new options.
The local community is one of the most overlooked sources of working capital for small businesses. During the past few years, consumers have been putting on a unified push to support their local small businesses by buying local. These consumers might also be willing to invest in their local small business.
Small business owners need to create some local people who have the financial incentive to pass the word about a local small business. These are the people that go directly to a local small business passing chain stores along the way and are willing to help the small business owner by making a small investment.
In addition, there are numerous non-profit organizations and government agencies that will support small businesses financially. The local state and city economic development agencies might have specific grants or programs for a particular business.
Another resource of working capital for small businesses that is available for free is the local Small Business Development Center (SBDC). This organization can help small business owners navigate through their options. All small business owners have to do is schedule an appointment with the SBDC and they have small business counselors and advisors that will help small business owners obtain the working capital they require.
Although, traditional banks are more reluctant to provide working capital to small businesses, there are some innovative ways for small business owners to obtain working capital. There are new breeds of organizations that are completely focused on helping small businesses owners obtain the working capital they require for expansion of to maintain their business operations. This includes everything from USDA loans and SBA loans to royalty based financing and purchase order financing.
There are some innovative and new ways for small business owners to obtain working capital even though bank lending to small businesses has practically become a thing of the past. They are readily available to those small business owners who are willing to doing things somewhat differently. All of these avenues of obtaining working capital for small businesses are available online.