Sources of Growth Capital for your Small Business
The Importance of Growth Capital for a Small Business
Often times, small business owners avoid taking out loans or issuing equity to increase their growth capital. But many times without this added capital, businesses stagnate before they can turn a real profit. To look into debt and loan options for small businesses, visit credit unions and independent banks. Many times, smaller banks are more committed to investing in local small businesses, and offer lower interest rates to help them boost their growth capital. Taking out a loan for your business can also allow some level of business control to remain with the owner, as the bank will not often attempt to control the direction of the company, so long as the loan payments are met.
Owner Capital Investment
When starting up a small business, the owner will almost always need to invest some of their own finances to set up their venture. However, cases where owners can fund their small business without the help of outside capital are rare. This is especially true for an established small business that is looking to invest in a new market direction. By investing personal capital, a small business owner can give other investors confidence in the credibility of their venture, and help secure more growth capital.
Venture Capital Firm Investment
Venture capital firms offer investments in the name of small businesses in exchange for equity, allowing the business owners to amass growth capital for their start up. Venture firms invest heavily in businesses, and often like to have some say in the direction a business takes. While venture capital firm investments can be a great way to gain growth capital for your small business and can relieve some of the personal stakes of starting up a small business, it can also remove some of the directional control you have over your business as a whole.
Angel investors are wealthy individuals that invest in companies for specific, personal reasons, and are not a part of a professional firm. In many cases, these investments are based off of personal interest in the company’s mission, and much like venture capital firms these individuals may want to hold a position on the company board. They offer unique networking opportunities, and can help increase the reputation of a small business.
To learn more about ways to grow your small business, contact Ironhorse for inside tips on investments, growth capital, and filing taxes for small businesses.