July 31, 2023 By Kristin Woodward

“Weather for small business is sunny, but remarkably unpleasant. It is humid, hot, and sticky with storm clouds on the horizon.”

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That’s how Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce, recently described the current economic environment for small businesses. While small businesses are doing well, and nearly 80% remain optimistic, according to the Chamber’s latest Small Business Index, difficulty in hiring, elevated inflation, and high interest rates continue to cause small business owners to proceed with caution.

Funding your small business in these uncertain times can seem daunting, but it doesn’t have to be. These five safe funding options may help you get the capital you need to start or grow your business.

SBA loans — Make the most of long repayment terms 

If you’ve been in business for 2+ years and have a healthy credit score, you may qualify for an SBA loan. These loans, known as the gold standard for small business owners, typically include lower rates and longer terms (10 years), which helps make repayment easier to manage. 

In the past, SBA loans were generally known for a tedious application process and time-consuming paperwork. However, SmartBiz® has streamlined the application and offers excellent customer service to assist throughout the entire loan process.

Line of credit — Only pay interest on what you use

A business line of credit functions similarly to a credit card. It allows you to access funds up to a predetermined limit whenever you need them. You only pay interest on the amount you borrow, making it a flexible and potentially cost-effective option for things like purchasing inventory or equipment, working capital, or even covering emergency expenses.

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Bank term loan — Lock in your interest rate

A bank term loan is a loan provided by a bank or financial institution with a fixed repayment term, typically ranging from one to ten years. These loans are typically a great fit when you need funds quickly and want to lock in your interest rate. They may offer predictability in terms of repayment, which may help you budget better. Funds may be used for working capital, debt refinance, new equipment purchases, and more. And successful repayment may help you build business credit.

Employee Retention Credit — Claim your refund

If your business was negatively impacted by the pandemic in 2020 and 2021, but you retained your employees, you may be eligible for a tax refund. As part of the CARES Act, the government established the Employee Retention Credit to encourage businesses to keep employees on their payroll. Currently, businesses that qualify could receive up to $26,000 per employee. SmartBiz and our partners can help you determine your eligibility and help file your paperwork.

Angel Investors — Think beyond the bank

Angel investors are wealthy individuals who provide funding to early-stage businesses in exchange for equity or a stake in the company. They often bring valuable industry knowledge, experience, and networks to the table and may provide guidance, mentorship, and strategic advice to help your business navigate challenges and make informed decisions. Because of their experience, angel investors are often more patient than other types of investors, allowing your business the necessary time to mature and become profitable. This flexibility may help to alleviate some of the financial pressures associated with traditional debt financing.

If you’d like to explore this option, Angel Investment Network is just one source that matches entrepreneurs with angel investors.

In Conclusion

Navigating economic uncertainty can be challenging, but there are safe and viable funding options available for small business owners. By exploring various financing avenues, entrepreneurs may be able to secure the necessary capital to grow and thrive. While economic conditions may fluctuate, careful planning and informed decision-making may help small businesses weather storms and continue on a path towards success. By staying resilient, adaptable, and open to innovative funding solutions, small business owners can confidently face economic uncertainties and seize opportunities for growth in a dynamic business landscape.

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