How Businesses Can Gain Easier Access to Money

Access to cashflow and growth capital can be the biggest barriers to growth for small businesses. Learn how your business can access the funding it needs.

Saturday, September 7th 2019 in Finance by Richard Bertch
How Businesses Can Gain Easier Access to Money

Your biggest priority as a business is funding. It's no secret that 82% of businesses go bankrupt due to poor cash flow, and a lot of this can be blamed on a lack of access to funding.

A lot of entrepreneurial guides recommend bootstrapping to start your business. There's a lot of value in attempting to do this, as you limit your personal financial risk. The problem with this is once you've figured out that your idea is viable you need funding to make it happen.

Fail to do so and someone else might have the funding to make your idea grow. There's a limited time window to take a stranglehold on the market.

So, here are some ways in which businesses can gain access to money.

Do You Actually Need the Money?

It might seem silly to ask this question of yourself, but a lot of entrepreneurs go bankrupt because they try to borrow too much.

When you start a business, the chances are you don't need $50,000 to get started. Don't borrow just because you're eligible for a loan.

Create a budget and ask yourself whether you need to take out a loan. A lot of entrepreneurs could easily dig into their savings and cover themselves for the first few months of growth.

A loan should only ever be taken out if you desperately need the money to encourage growth.

Begin by Looking at Home

Before we go into different ways in which you can access money, start by looking into your business. The number one challenge for 33% of small business owners is cash flow and management.

By making alterations to the way you manage your cash, you can free up an enormous amount of money. Poor management is such a huge issue in the small business community that entrepreneurs often don't realize they have thousands of dollars right under their noses.

For example, corporations don't pay invoices for 90 days for a reason. They do it to improve their cash flow. A change like this can make a huge difference to your cash flow.

Changing the way you manage your business's cash flow, can give you much easier access to money right now.

Look for a Micro-Loan Organization

Businesses have a lot of hoops to jump through if they want to go down the traditional route of getting a bank loan.

To fill the void, micro-loan organizations have become a major resource for small businesses. We've seen this trend all over the world. Now, only 8% of micro-firms in Europe see access to finance as a major obstacle, for example.

Micro-loan organizations are designed for entrepreneurs who need relatively smaller amounts. The upper limit for these loans tends to be just $5,000.

When you're in the early stages of running a business, you don't want to borrow too much, but banks typically want to force you to borrow at least five-figures or they're not interested.

Micro-loan organizations offer this facility. They still demand to see business plans and budgets, but they're nowhere near as strict as traditional lending facilities.

Look for Any Government Loans and Grants

The reason why governments have their own small business lending programs is so more businesses can get easier access to money.

The Small Business Administration (SBA) in the US is one of the most well-known government lenders. They do offer grants, which are a crapshoot, but nearly every business can qualify for one of their loans. These loans are guaranteed by the SBA, with approved banks providing the money.

These loans are designed for people with strong histories of borrowing. The number one determining factor is your credit score.

So, if you have a great credit score, provide the documentation as you're highly likely to get accepted.

The same principle usually applies to government lending programs.

Crowdfunding Could Be Right for Your Business

Crowdfunding is an increasingly popular option for ventures in certain sectors. The way it works is you create a campaign, offer perks to donors, and then market it. Around 50% of crowdfunding campaigns succeed, but they do require a lot of sharing and a lot of promotion to acquire the funding requested.

You can't just opt for a crowdfunding campaign for any type of business. These campaigns work better when they're unique projects. They must have some mass market appeal to attract donors.

Asking for money to start an accountancy business is unlikely to go well, to give you an example.

Take note, you only typically get the money if you reach your funding goal. That's why we recommend you start a campaign on IndieGoGo as it's one of the few sites that allows you to keep whatever you raised, for a small cut.

Credit Cards

Some entrepreneurs have used things like credit cards to great effect. What we would mention when opting for these types of funding options is that the interest rates can kill your business.

The only way to avoid them is to pay the amount off in full every single month. That way the interest rates don't kick in.

They can be used for small purchases, but only if you know you can pay them off at the end of the month.

They're not easy access options for medium to long-term borrowing.

Banks Do Remain an Option

Previously, nobody would have suggested a small business waste their time jumping through the hoops at a big bank. However, 2018 and 2019 have seen approval rates soar for small businesses.

The current approval rates for big banks is 26.9%, with smaller banks approving half of all applications. This is the highest rate hit since before the great financial recession of 2008.

What this tells us is that small businesses should, once again, consider applying for bank loans. Take note, the approval rate for big banks remains low. Unless your idea is rock solid, it's likely not worth the months' worth of effort.

On the other hand, if you know of a reputable small bank in your town or city it's well worth completing an application. A 50-50 shot is great for any type of loan application.

Just make sure you fill out your paperwork and present a professional front.

The downside of choosing a bank is it can still take many months to receive a decision on your application. Furthermore, if there are any mistakes, you'll usually have to submit a new application and begin the process all over again.

How to Increase Your Business�s Likelihood of Getting Access to Money

None of these funding options come easy. You can't just show up and expect to get the money you're asking for.

That's why you need the following to increase your chances of success:

A Working Business - You increase your chances of success when you've already opened your business. Lenders generally don't like to fund ideas. They want to see the business working on a micro scale so they can feel confident about getting their money back.

Business Plans - Always have a business plan so you can show a lender that you have a roadmap to success. Lenders are experts in inspecting business plans and judging whether they're likely to be successful. The more detail you can add the better.

Budgets - This is perhaps the most important point of all. Your budget will determine where you're going to allocate the money. We recommend preparing a budget using both your current budget and what you would do with the money if you were accepted.

The key is professionalism. So many entrepreneurs believe that just because they're using a micro-funding organization, they don't have to prepare the same documentation as they would a bank.

This couldn't be further from the truth. All lenders want to see plans and budgets, so they know you're serious and that your business model is viable.

Build a New Budget Based on the Loan

Finally, the key to getting easier access to money is not just getting the money it's about building up your business.

Entrepreneurs often create budgets during the loan application, but what they fail to do is create a budget after they get the loan. They don't consider the interest rates and the duration they must pay back the loan.

This can amount to being thousands of dollars off once you get access to the money you need. Over time, this can cripple your business.

That's why you should have a budget that factors in the interest rates you must pay, along with any additional fees.

Last Word - Gaining Easier Access to Money isn't Hard

The wonderful thing about the era we live in is it's never been easier to access money. There are so many different options for getting a loan, or a grant, that doesn't involve dealing with a major bank.

Whether it's a micro-funding organization, a loan from a government department, or crowdfunding, you have a range of options to look into.

What's your preferred method of acquiring funding for your business?

About the Author

Richard Bertch

Richard is a contributing finance author at and freelance writer about all things business, finance and productivity. With over 10 years of copywriting experience, Richard has worked with brands ranging from Quickbooks to Oracle creating insightful whitepapers, conversion focused product pages and thought leadership blog posts. 

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