Want to grow and become more digital-savvy but don’t have the funds? After determining how much you need to borrow and what you can afford, here are some lending options available:

Traditional Loans

When applying for a loan, banks will likely require you to show your business plan and sales forecast, balance sheet and P&L, bank statements and tax information, and any debts you or your business may have. Expect a lender to test you a bit as they’re simply trying to learn about your business. And while you shouldn’t hide anything, do focus on the positive and back up your answers in a clear, calm way.

Business Credit Card

Credit through a small business credit card can provide the needed credit line to fund smaller amounts. A small business card can be great for separating expenses for tax reasons, building business credit, and offering business specific perks such as employee cards and a credit limit. Some cards may also offer a sign-on bonus, or low interest rate promotion. 

Qualifying for a credit card can be easier than qualifying for a loan, but be sure to check the financial terms (such as fees and APR) to determine if it’s the right option for you. Search online or visit your local bank on potential small business card products that best meet your needs.

Crowdfunding

Some businesses are financed by crowdfunding, which involves collecting donations from many people – usually online. There are two basic types of crowdfunding: rewards-based crowdfunding, where donors receive a “reward” once the fundraising goal is reached (a free product sample, for example) and equity crowdfunding, where donors pledge equity in a new company or venture. 

While crowdfunding can be a great way to increase awareness and exposure, there are risks associated with it as well. Failure to meet fundraising goals can negatively impact a business’ reputation. It’s also unpredictable– while some crowdfunding campaigns are hugely successful, many are not.

 

This article is an excerpt from Digital Transformation of SMB's: The Future of Commerce presented by Visa.