Financing for Your Small Business or Startup
You have a knock-out idea and you’re ready to start a business. But how will you fund it? You have plenty of options, but you need the proper approach. Even if you’re asking a family member for help, you need to determine how much money you need and how long that amount will last. Creating a robust business plan, while not required for all financing options, is always a good exercise for testing the viability of your idea.
When you need money to launch a new business or a startup, consider these eight business financing options from your trusted business lenders at Ameris Bank.
Friends and family are a logical and popular financial resource for new entrepreneurs—but tread carefully. Loan repayments can be a tremendous source of stress if terms aren’t laid out clearly. If you’re thinking of going this route, read up on tips for keeping things strictly business when you get a loan from friends and family. Be sure to do your homework before making a small business startup financing pitch. Document everything as you would with a more traditional investor or lender to avoid future conflict.
Credit cards are an easy way to get money fast, but they usually come with higher interest rates, and debt accumulates quickly if you don’t pay your balance in full every month. If you have the cash and are enticed by bonus rewards, credit cards can be a great way to float a larger purchase for the month. From our Business Cash Preferred Card and Smart Business Rewards Card to our Business Real Rewards Card, you can earn points on your purchases or earn cash back. Simply looking to save on interest? Tap into our Business Card for an extended low introductory rate.
There are risks, however. Depending on your business structure, you might be the personal guarantor on all debts, meaning if you fall behind on payments, your personal credit rating suffers. Also, if your business is incorporated, your credit card issuer can still require that main shareholders guarantee the line of credit, putting your personal credit on the line.
If you’re interested in taking out a traditional bank loan, a comprehensive business plan is an absolute must. Bank loans can sometimes be difficult for new businesses to obtain because they usually require several years of profit-and-loss statements. For this reason, many banks don’t accept startup loan requests.
Ameris Bank however is invested in supporting businesses of all sizes, and partners closely with business owners to deliver personalized solutions. Contact us to find out if a business loan from Ameris Bank is the right choice for you.
A loan backed by the Small Business Administration, a division of the federal government, can be a viable alternative to a traditional bank loan. The SBA doesn’t lend directly to small business, but instead provides a partial guarantee for loans you’d get from an SBA-approved lender, such as Ameris Bank. Regardless of your funding status, the SBA can serve as a great resource for education and mentoring at any stage of your business journey. Ameris Bank offers a team of seasoned SBA lenders who are experts in utilizing SBA financing products including SBA 7(a) and 504/CDC loan programs which offer competitive rates for business growth.
Crowdfunding started as a way to raise money for nonprofits and charity projects and quickly morphed into an option for business funding, especially after federal legislation was passed to encourage alternatives to traditional funding. Crowdfunding can be effective for small, community businesses that can receive monetary support from the people they serve.
Setting up a crowdfunding account for your business requires a strong marketing campaign, because that’s how you pitch your idea and encourage investment. Be sure to read the fine print when comparing platforms since not all crowdfunding systems are created equal in terms of fees, which can differ based on your industry.
Angel investors are usually affluent individuals who invest in startups in the earliest stages in exchange for an equity ownership (typically 20-25%). They are different from venture capitalists in that they provide seed funding, less than $1 million, whereas venture capitalists invest larger amounts in more established growing companies.
To find an angel investor, search investor networks that may exist in your niche, industry or community. Angel investors are looking for strong returns on investment, so showing them how their investment can make a difference will strengthen your position.
Angel Investor Network is a good place to start.
Rollovers for Business Startups (ROBS) provide a way to bring over some money from your 401(k) for debt-free funding. Consider this option if you plan to use more than $50,000 from your account.
Partnering with a ROBS expert is the best way to ensure you follow the rollover’s specific rules. For example, there can be fewer tax penalties if you set up your company as a C corporation and follow the requirements that your new company must sponsor a 401(k) plan. As with all tax-related matters, it’s best to consult your accountant for complete details.
Microloans, ranging from $500 to $35,000, are typically short-term loans with low-interest rates available specifically to self-employed people, new startups with low capital, and small businesses with small staffs. They can be easier to qualify for as a small business startup than a traditional bank loan and can help bridge any gaps between the money you have and the money you need.
The best place to start researching options is the SBA website. Resources are also available through your local Small Business Development Center, Women's Business Center, Veteran's Business Center and the business mentoring experts at SCORE.
Feel free to stop by one of our Ameris Bank branches and speak with our business lending team, or contact us to learn more. We would be happy to answer your questions and see how we can help.
All loans subject to credit approval.
Ameris Bank is not affiliated nor endorses the companies referenced in this article.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
When you need money to launch a new business or a startup, consider these eight business financing options from your trusted business lenders at Ameris Bank.
Business financing money from family & friends
Friends and family are a logical and popular financial resource for new entrepreneurs—but tread carefully. Loan repayments can be a tremendous source of stress if terms aren’t laid out clearly. If you’re thinking of going this route, read up on tips for keeping things strictly business when you get a loan from friends and family. Be sure to do your homework before making a small business startup financing pitch. Document everything as you would with a more traditional investor or lender to avoid future conflict.
Use a credit card
Credit cards are an easy way to get money fast, but they usually come with higher interest rates, and debt accumulates quickly if you don’t pay your balance in full every month. If you have the cash and are enticed by bonus rewards, credit cards can be a great way to float a larger purchase for the month. From our Business Cash Preferred Card and Smart Business Rewards Card to our Business Real Rewards Card, you can earn points on your purchases or earn cash back. Simply looking to save on interest? Tap into our Business Card for an extended low introductory rate.There are risks, however. Depending on your business structure, you might be the personal guarantor on all debts, meaning if you fall behind on payments, your personal credit rating suffers. Also, if your business is incorporated, your credit card issuer can still require that main shareholders guarantee the line of credit, putting your personal credit on the line.
Get a bank loan
If you’re interested in taking out a traditional bank loan, a comprehensive business plan is an absolute must. Bank loans can sometimes be difficult for new businesses to obtain because they usually require several years of profit-and-loss statements. For this reason, many banks don’t accept startup loan requests. Ameris Bank however is invested in supporting businesses of all sizes, and partners closely with business owners to deliver personalized solutions. Contact us to find out if a business loan from Ameris Bank is the right choice for you.
Leverage a Small Business Administration (SBA) loan
A loan backed by the Small Business Administration, a division of the federal government, can be a viable alternative to a traditional bank loan. The SBA doesn’t lend directly to small business, but instead provides a partial guarantee for loans you’d get from an SBA-approved lender, such as Ameris Bank. Regardless of your funding status, the SBA can serve as a great resource for education and mentoring at any stage of your business journey. Ameris Bank offers a team of seasoned SBA lenders who are experts in utilizing SBA financing products including SBA 7(a) and 504/CDC loan programs which offer competitive rates for business growth.
Turn to crowdfunding
Crowdfunding started as a way to raise money for nonprofits and charity projects and quickly morphed into an option for business funding, especially after federal legislation was passed to encourage alternatives to traditional funding. Crowdfunding can be effective for small, community businesses that can receive monetary support from the people they serve.Setting up a crowdfunding account for your business requires a strong marketing campaign, because that’s how you pitch your idea and encourage investment. Be sure to read the fine print when comparing platforms since not all crowdfunding systems are created equal in terms of fees, which can differ based on your industry.
Find an “angel investor”
Angel investors are usually affluent individuals who invest in startups in the earliest stages in exchange for an equity ownership (typically 20-25%). They are different from venture capitalists in that they provide seed funding, less than $1 million, whereas venture capitalists invest larger amounts in more established growing companies.To find an angel investor, search investor networks that may exist in your niche, industry or community. Angel investors are looking for strong returns on investment, so showing them how their investment can make a difference will strengthen your position.
Angel Investor Network is a good place to start.
- Alabama Angel Investor Network
- Florida Angel Investor Network
- Georgia Angel Investor Network
- North Carolina Angel Investor Network
- South Carolina Angel Investor Network
Borrow from your 401(k)
Rollovers for Business Startups (ROBS) provide a way to bring over some money from your 401(k) for debt-free funding. Consider this option if you plan to use more than $50,000 from your account.Partnering with a ROBS expert is the best way to ensure you follow the rollover’s specific rules. For example, there can be fewer tax penalties if you set up your company as a C corporation and follow the requirements that your new company must sponsor a 401(k) plan. As with all tax-related matters, it’s best to consult your accountant for complete details.
Take out a microloan
Microloans, ranging from $500 to $35,000, are typically short-term loans with low-interest rates available specifically to self-employed people, new startups with low capital, and small businesses with small staffs. They can be easier to qualify for as a small business startup than a traditional bank loan and can help bridge any gaps between the money you have and the money you need.
Next steps
The best place to start researching options is the SBA website. Resources are also available through your local Small Business Development Center, Women's Business Center, Veteran's Business Center and the business mentoring experts at SCORE. Feel free to stop by one of our Ameris Bank branches and speak with our business lending team, or contact us to learn more. We would be happy to answer your questions and see how we can help.
All loans subject to credit approval.
Ameris Bank is not affiliated nor endorses the companies referenced in this article.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.