Funding an emergency, a small business nightmare
The days of seeking and being approved for a line of credit on your signature and a good credit score are over, but it is still a good idea to have access to cash when you are a small business owner. As a restaurant owner, I have been surprised more than once by a cooler that quits, a roof that leaks into the kitchen or an oven that doesn’t heat. And even though you know that customers are clamoring for a larger dining room and a bar that serves more than wine and beer, unless you have some way to raise the cash for the expansion that you know is sure to double your revenue, you may have to rely on some sort of alternative financing. So get creative!
Family and friends
Your first and most likely source is family and friends. They believe in you and want to help. If they have the means, they probably will. But, you still owe them an obligation to show how they will be repaid, whether as a monthly payment toward a loan, a share of the business or profit sharing.
There are two types of crowdfunding venues. Unless you are willing to give up part of your ownership, the crowdfunding venue that exchanges pledges for perks or rewards is the way to go. But, as someone who has been there, I am warning you, don’t launch a crowdfunder campaign unless you already know how many supporters you have. You cannot depend on strangers or the crowdfunder website to bring you contributors. You have to bring the backers to the forum through social media and word of mouth yourself or you will not reach your goal. For more information on crowdfunding go to Amazon to get a copy of my latest ebook on how to kickstart your dream.
If you have good credit and are lucky enough to have credit cards with high limits, you may be able to get a cash advance at a fair rate for short term capital. But, be certain it is short term as even a fair rate with a credit card company can be excessive.
Real estate home equity line of credit
Your home may provide you with enough equity to convince a lender to approve you for a home equity line of credit. Just remember, if you default, you are putting your home at risk.
Merchant cash advance
If you have an established merchant services account that supports your claim that you indeed will have enough revenue to qualify for an advance, a merchant cash advance may be the way to go. Your revenue history may be your biggest asset.
Whatever you decide, do it BEFORE you need it!
Buon Appetito e Buona Salute, Chef Angela Bell
Beyond the Bull (an “eat smart” kitchen)
233 W. Main St., Central, SC 29630
Last modified: February 28, 2013
This story is part of our Small Business Corner, a peek into the life and trials of small business owners.