2017 was full of the important events and remarkable changes in the United States. Despite a little political instability, natural disasters and the major tax reform, the US economy became stronger and got new optimistic plans for growth.
Low fuel prices, high employment level, and the records on the stock market made 2017 a good year for small business financing. However, the New Year brought some uncertainty and the expectations of new trends that may have a huge impact on business financing. Read this article to find out what business financing options 2018 is already offering and what tendencies an entrepreneur face this year.
Traditional Bank Loans Are Back
The high rejection level of traditional bank loans gave the impression that this method of business financing is not even worth trying.
Despite the low chances of approval, a lot of entrepreneurs still choose to apply for a bank loan for different business operations including business equipment financing and financing the purchase of an existing business. This decision is quite reasonable considering the good loan terms and opportunity to build credit.
This way of financing is likely to become more popular in 2018 due to optimistic statistics. According to the Small Business Lending Index survey, one of the requests gets the approval for a bank loan. As the interest rates grow, big banks become more interested in lending the money.
The approval level of 25% is much higher than the one of previous years. It could convince more business owners to apply for a bank loan.
401(k) Business Financing Becomes More Popular
Rollovers for Business Startups, also known as 401(k) business financing is another option for customer financing for small business. Although a lot of business owners are still not aware of this funding method, it has all the chances to gain popularity.
ROBS arrangement gives a chance to any person who has at least fifty thousand dollars on retirement account 401(k) or IRA to spend this money on business financing. This method also allows avoiding tax penalties and early withdrawal fees that you may usually face while taking the money before you turn 59,5. As it is not a loan, you do not need to spend a lot of time on application processes or worry about your credit score.
Borrowing from Online Lenders Is Still An Option
Borrowing from online lenders is still one of the popular options for business financing. It is a solution number one for those businesses who do not qualify for a traditional bank loan. A simple application form, fast procedure, and flexible terms make this way of financing a business very attractive.
Despite the rising popularity of alternative lending, entrepreneurs start to be more careful with choosing an online lender.
A thorough research of potential lenders, their reputations, and checking the customer’s feedbacks tend to become very common. It is not a secret anymore that the unknown online lenders may take advantage of small business owners. While online lending still remains one of the methods of business financing, the entrepreneurs start to choose carefully.
Raising Money with Crowdfunding
The platforms like Kickstarter and GoFundMe inspire business owners to rely on crowdfunding to finance the business. While success stories of business owners who raised money this way may seem a bit unrealistic it is a very tempting method to try. The changes that are expected in crowdfunding in 2018 prove that this funding method becomes more serious.
The campaigners are likely to keep moving from mass-market platforms to those dedicated to a specific industry. Gamers, musicians, sportsmen, educators form their platforms to make crowdfunding easier both for them and the investors.
Potential investors become more careful with their money and make smart thought-out choices. While crowdfunding is still highly accessible for small business owners, it also requires putting an effort in order to get funding. If you look for apple business financing, you will have to convince an investor that it is really worth it.
Bootstrapping As a Necessity
When the entrepreneurs think how to get financing for a business, some of them still choose bootstrapping. Funding a business with your own money is one of the difficult routes. This method also has its advantages, such as total control of finances. There is no need to share equity, look for lenders, or make any additional payments. However, you risk losing all your money in case of a failure. Experts usually recommend to not mix your personal and business finance.
Considering the variety of business financing methods in 2018, bootstrapping tends to become more a necessity than an option. It is still a solution for those who are on early stage and cannot profit from other financing solutions.
The new year offers plenty of business financing options. If a fast and successful start is your goal, you might want to combine all the available financing options for achieving better results.