Small businesses need capital to grow, and there are many sources of funding available. However, before seeking out funds, it’s important to have a solid business plan and a clear idea of how the money will be used, how it will be repaid, and why the business is a good risk for investors. Investors want to know about the company’s management to have confidence in the business plan and the people behind it.

There are seven funding sources to consider when expanding your business:

1. Bootstrapping: This is when you finance your business with your own savings. If it’s not possible, you’ll need to look for other sources of funding.

2. Loans from friends and family: Sometimes, friends or family members will provide loans. This approach could only become positive if they lose money on the investment. However, if the business succeeds, a stronger bond can be formed.

3. Credit cards: Credit cards are usually the easiest option for getting money, but they come with a high cost for the capital since credit card interest rates tend to be high. The amount you can obtain is based on your credit limit, probably less than you’d get from a bank or other loan type. Credit cards are a good source of capital for small-scale revolving needs and entrepreneurs who want to retain ownership and control of the company.

4. Crowdfunding sites: Online crowdfunding sites have become popular in the past few years. They’re usually used to help businesses raise money to launch a specific product. Crowdfunding can be a good way to pre-sell your products and get the capital to build them, but you may use a lot of the money on incentives to get people to sign up. Some crowdfunding sites only let you access the funds if you meet your fundraising goal, and the site may take a percentage of earnings.

5. Bank loans: Getting a bank loan or line of credit can be more time-consuming than using a credit card. When you make your case to the bank, you must show you have a history of paying back debt. The bank will want to see a business plan and financial forecast. Some loans require collateral in case you don’t pay back your debt.

6. Angel investors: Angel investors are high-net-worth individuals who get an equity stake in return for their financing. They expect to make a profit and usually have business expertise they share with you to help your company grow. Know that angel investors may scrutinize your business plan and you’ll have to build a case as to why they should invest, which is good. The vetting process for entrepreneurs should ensure that the business plan is solid.

7. Venture capital: Like angel investors, venture capitalists take equity in your business in exchange for financing. Venture capital funds resemble mutual funds because they pool money from many investors. Venture capitalists also have business expertise in the areas where they invest and will be involved in running the business. You’ll cede some control and equity in exchange for potentially large amounts of money.

When considering funding options, it’s important to determine how much money you need and what you’ll give up for it. This will help you decide which capital source to choose to expand your business. You can talk to Expert today by making call at  +1 (586) 800-0111.