Here’s a more conversational and streamlined version of the article:
Hey, did you know that credit cards are a big deal for small businesses? In fact, a study from 2012 showed that nearly 80% of small business owners used credit cards to kickstart or grow their business. That’s a pretty big deal, right? Another study even found that between 2003 and 2008, the expansion of credit card lending led to the creation of 1.6 million jobs. For every $1,000 spent on a business credit card, small businesses saw a $5,500 increase in revenue. So, it’s safe to say that about 4 out of 5 small business owners are using credit cards. Even the founders of Google, Larry Page and Sergey Brin, used credit cards in the early days. But remember, like anything else, you can use credit cards the right way or the wrong way. So, make a plan, not a speech. There are places like Lendio and NCH Capital that can help you learn how to use business credit cards to grow your business.
Now, let’s talk about microloans. These are small loans usually given to borrowers who are low income earners or have less than perfect credit and can’t qualify for traditional bank financing. As of 2009, nearly 74 million entrepreneurs across the world have microloans that total up to $38 billion U.S. dollars. Most microlenders report that between 95 – 99% of their loans are repaid. This suggests that small businesses have seen a lot of success from getting microloans. In fact, a recent survey found that 42% of respondents said their business income increased as a result of a microloan.
But what if you don’t qualify for credit cards or microloans? Well, personal savings is the number one financing option for most people in that situation. It’s a great way to get started. If you’re one of the many business owners with less-than-perfect credit, then it’s time to do something about it. Resources like Creditera can help, as it’s currently the only credit monitoring platform that allows business owners to monitor both business and personal credit in one place.
Another option is the 3 F’s: Family, Friends, and Fools. This is a great example of how the small business funding options are different for everyone. For some people, they have a long list of potential investors from their friends and family. For others, it’s a short list. It can be hard to get financing from family and friends because they might not fully understand the business or believe it will succeed. You’ll really need to convince them that the business will be lucrative and successful to get them to invest. If you do accept an investment from a friend or family member, then treat them no different than you would a savvy angel investor. They deserve updates, communication, and to be one of the first phone calls when there is a problem.
You can also use your retirement accounts to fund your business. This is a popular option for entrepreneurs who want to buy a franchise. To do this, you would use the Rollover for Business Startup (ROBS) Strategy. This involves forming a C Corporation and rolling your current retirement plan over to the new corporation’s retirement plan. It’s a bit complex, so you’ll want to consult with an expert. But remember, this is one of the riskiest ways to finance a business, along with Home Equity Lines of Credit and using personal savings. If your business fails, you could lose your nest egg or whatever portion of it you "rolled over."
In conclusion, successful business owners all have one thing in common. They take action. They execute. Mistakes and failures are part of the journey, so learn your options, move forward, and accept that there will be lessons to learn along your road to success. Figure out which small business financing option is best for you and your dream.
