A business must always strive to grow, but circumstances like the coronavirus pandemic hinder many companies from earning. Startup businesses even had it worse, especially the ones that just started right before the pandemic.
Luckily, the world is slowly starting to get back on track, and many businesses are beginning to thrive again. Starting a business, especially at this time, can still be pretty hard. The good news is that startup businesses can get financing options so that they can have additional funding.
What are these financing options? We listed them all down for you. Read on below to learn more.
Financing Options for Startups
There are many types of financing options available, which is why you should consider knowing more about them. This way, you can learn what option works best for you.
Bootstrapping, also known as self-funding, is a financing option that allows you to use your personal finances to support your business.
The main advantage of this option is that you have 100% control over the company because the funding came from your pocket. The only thing that you have to worry about is that your funds might be limited.
2. Community Development Financial Institutions (CDFI)
CDFIs are private financial institutions that primarily provide lending and funding services for businesses in economically challenged communities.
Like any other lender, CDFIs rely on credit scores to determine if they should grant financing to an applicant or not. However, they’re less strict and more flexible when lending money instead of commercial banks.
3. Commercial Banks
Most banks employ low-risk, high-profit lending policies. These policies tend to favor bigger businesses and don’t do much for startups.
The reason for this is because startups are not considered ideal candidates for bank loans since they’re unknown. You must provide an excellent business plan if you want to get