8 Ways to Boom Your Business with an Unsecured Business Loan

Businesses require funds to finance their operations. Finances to fund businesses are not readily available due to unfavorable changes in the world economy, such as recession and inflation. These factors make lending a very expensive affair. As an entrepreneur, you must come up with ways of getting funds to finance your activities at a very low or no cost. The following are ways in which an entrepreneur can finance their business with unsecured business loans.

1. Unsecured loans

This is a crucial source of funding as it cushions the owner of the business against the risk of closing down when the funds to finance operations are drained. The business owner may seek this option from banks. Business should nurture a good relationship with lending institutions and also create a creditworthy record with them as this makes it easier to get loans. Unsecured loans mean there is no collateral needed to secure the loan.

2. Establish a line of credit

This involves establishing an account synonymous to a checking account. Under this method, the business agrees with the lending institution on the amount which is made available to their business and it determines when to withdraw the amount according to the needs of the business. This option provides the business with a choice for withdrawing any amount they need and the balance remaining is made available to business when its need for more money arises. Its merit is that you only pay the interest on the outstanding balance.

3. Leasing equipment

This is not necessarily a small business financing option, but you do need equipment to run your business successfully. Most of the time, you need equipment even before starting. Leasing does not require a lot of funds and it is of merit because you are given a choice to buy the equipment. Since you already have paid half of the amount to own it, if you are interested, you can pay the other half. If you don’t like it, you can sign another lease for a different type of equipment.

4. Inventory financing

This option is limited to retailers and it is a way in which a lender provides finances so you can buy commodities to sell at your business. This option brings flexibility, especially when you want to expand, as it provides an external source of funding your inventory and hence the income generated is used to fund expansion.

5. Crowdfunding

This is the practice of funding your business by raising money from a large number of people. It has two options, that is, reward crowdfunding and equity. Reward crowdfunding involves exchanging rewards such as products for capital. Equity crowdfunding involves giving a part of your business to the investor. Equity crowdfunding is very popular and attractive to investors who are seeking to multiply their money. Reward crowdfunding can act as a way to acquire capital as well as help you reach out to new customers.

6. Credit card stacking

Compared to other financing options, credit cards are an inexpensive strategy for funding. Credit card stacking gives you the opportunity to fund your business using the combined power of several credit cards. The aim of the lender is to get several low rate credit cards whose total credit limit reaches the funding needed. It has several advantages such as no collaterals are needed, it is cheaper as compared to other business financing options such as crowdfunding, it is readily available for startup, and it is very convenient when you need immediate funds as it takes less than 30 days. Its disadvantages include the fact that you must pay a service fee to the lender and the need to keep track of several credit statements each month.

7. Savings

This involves using the money you have saved in your bank account or in your cash box. I personally like this method, as you don’t depend on any entity to start your business for funding. It is also advantageous as you are not starting up with a debt or giving a slice of your business to anybody in the name of raising capital using equity.

8. Friends and family

Friends and family not only provide the much needed moral support and encouragement when starting a business, but also sometimes they can also assist you with cash. It is also possible to negotiate for far more better borrowing terms from your loved ones. It is advisable to use caution when dealing with them as failure to pay their debt back can result in the breakdown of the family or friend relationship.