When it comes to growing their business, many owners hesitate to take out loans or issue equity. However, without doing something like this, the business is likely to become stagnant- or even deteriorate. If you need some growth capital, you might want to start by reaching out to local credit unions and independent banks, as they are usually more interested in funding local businesses and may even be able to offer lower interest rates than traditional banks.
In this article, we’ll look at a few options for finding growth capital for your small business.
The truth is, it’s very rare that a small business owner is able to get all of the capital they need from external sources. Typically, they have to invest some of their personal funds, especially if they are trying to take on new projects. One benefit that comes with investing your own money into your business is that it shows that you are confident in your business and the direction you are going. When you go “all in”, you are more likely to catch the attention of outside investors and possibly convince them to invest in you.
Venture Capital Firms
You may have heard of venture capital firms, but do you really know what they are and what they do? These are institutions that invest in emerging businesses on behalf of clients. In exchange for this investment, they receive equity in the business. If they do invest, they typically will invest large amounts of money and are very interested in the direction the company takes. They will often expect to send a representative to sit on your board. By offering equity in exchange for this investment, you don’t have to worry so much about paying the money back or any liabilities if the business does fail. Of course, it also diminishes your ownership of your company.
An angel investor is very similar to venture capital firms, only this is either individuals or groups of individuals that are looking for certain types of investments. They are not part of a firm, so they are more likely to invest in a business based on their own opinion of the business and its mission. Angel investors are also likely to want to sit on your board or offer you business advice. Additionally, they are often able to set you up with a network of suppliers and/or customers to fuel your business growth.
KPI offers customized growth capital solutions for businesses of all types. Contact our offices to get the financing you need.