Starting a new company is never easy, especially when it comes time to find funding. Many entrepreneurs get the capital they need with the help of lending institutions like banks and credit unions – but these financial institutions often require more documentation and have stricter requirements than what’s needed by other sources of funding (like venture capitalists). Luckily there are still some options available in the form of private lenders!
Private lenders, like Versa Business Systems, are an excellent resource for startups seeking financing. They can provide loans to small businesses with less scrutiny than other sources, making them one of the preferred ways to finance business ventures. Read on for tips on securing financing from private business lenders.
Types of Private Business Lenders
There are two types of private business lenders: Business Development Corporations (BDCs) and Community Development Financial Institutions (CDFIs).
Business development corporations can offer funding to small businesses that bank at their institution. These loans typically range between $15,000 – $150,000, with the possibility for additional capital in some cases. Most BDCs require you to have a relationship with them already through your bank account or other ties to the company before working directly with you to secure funding for your business venture.
Community Development Financial Institutions provide similar services as traditional banks but focus more heavily on serving disadvantaged communities than others. CDFIs often help people who would otherwise not be able to secure financing from other sources.
There are other online lenders and private lending companies that you can contact for funding as well.
How do Private Loans Work?
Private loans are not very different than a loan offered by a bank or any other financial institution. The main difference is not the structure but the conditions attached to a loan.
As with all other loans, you’re required to apply, get approved, and pay back the loan according to the agreed schedule. The repayment period varies in lending firms and could come with weekly or monthly payments.
How to Get Financing from Private Lenders?
The first step should be determining how much money you need.
Second, ask yourself if you’re willing to give up part ownership of your company to get funding – many successful companies have been launched with this model, so don’t rule it out. Finally, look into applying at lending firms online or by calling them directly on their phone numbers listed on their websites. Be sure that they deal only with loans explicitly made to businesses rather than personal loans because interest rates will vary between these two options!
You can also seek help from professional funding agencies that can help connect you with private lending bodies.
Versa Business Systems is an organization that helps small businesses in Florida get access to the funding they need to run operations smoothly. We help businesses secure short-term loans at affordable rates. Apply for funding now!