News & Insights from republic bank

Access to Capital

When you start or are growing a small business, your access to capital is how easy or difficult it is for you to amass money or resources, which are necessary to get your business off the ground and help you establish your brand. Securing capital can be a challenge for any business owner, but there are many ways to do so, including the following.

Break Open the Piggy Bank

One of the first ways many small business owners get started is by using their personal funds to fuel their business. This can be done by pulling from your savings or taking out a home equity line of credit, which allows homeowners to borrow money against the equity they have in their home. It’s important to be sure that any personal money you put into your business is properly documented for tax purposes. A CPA or tax preparer can also help you determine which funds are tax deductible or not.

Evaluate Your Cash Flow

By paying close attention to how much money is moving in and out of your business, you may be able to find areas where you can either cut expenses or generate more revenue. If you can do so, you can use the extra cash to invest back in your business. Closely evaluate your spending patterns, trim any unnecessary (or more expendable) costs, and research revenue growth strategies in your business field.

Get a Small Business Loan

There are a handful of different types of small business loans that can be secured to help grow your business. You can apply for term loans, lines of credit, and other SBA loans through your traditional bank as well as through online lenders. In order to do so, you first have to ensure your credit score is healthy and your financial records are organized. Then be sure to carefully research your lending options and the associated terms, fees, interest rates, and payment schedule. If you’re unable to pay back the loan, this might not be the right option for accessing capital.

Find Venture Capitalists or Angel Investors

There are two types of investors that will trade you money for an ownership stake in your business. Venture capitalists are typically large firms whereas angel investors are affluent individuals or groups.

Venture capitalists provide support for your business by placing managers or board members in your business and tend to want to get a return on their investment quickly so they can sell their stake and make money on the investment. Angel investors typically just provide the initial seed money in exchange for equity.

Ask Questions

There are several other ways to gain access to capital, such as crowdfunding campaigns, small business grants, and more. If you’re not sure what’s best for your business, it can be helpful to speak with a financial advisor and/or tax accountant to evaluate the state of your business and determine the best plan of action. For more information on business loans, lines of credit, cards, and accounts, visit our website, get connected with a Business Banking expert, or give us a call at 800-526-9127.

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