How do I… develop financing?

Identify potential sources of funding

Once you've answered the above questions, it's time to explore potential sources of funding. Depending on your needs and goals, different types of business loans may be better suited for you.

The following offer varying business loans and financing options:

• Banks and credit unions

• Online lenders

• Venture capitalists

• Business incubators

• Government grants and programs

• Angel investors

Once you know what you need, do some research. Ask them what types of business loans are available for you, what the terms are and if there are any special requirements for applying.

If you’re taking a loan from a non-traditional lender, like an angel investor or business incubator, make sure you know what the repayment terms are. Not to mention, if you need to give up business equity (a stake on your business) in order to get the loan or investment.

Choose a loan

Next, consider the type of loan you want to apply for. A business loan, for instance, can be a great way to upgrade technology or expand operations. On the other hand, development loans are often used for longer-term investments such as property or building renovations.

If you are looking for short-term financing, consider a line of credit. With this type of loan, you can access a pre-determined amount of funds as needed. Plus, you only pay interest on what you use.

Term loans are also an option if you need to purchase or expand quickly. With a term loan, you receive a lump sum of money that will be paid back over a set period of time. Term loans offer fixed or variable interest rates, meaning the rate changes with the market—variable rates are higher risk and thus are typically lower. Talk to your financial advisor about what kind of interest rate is best for you.

Explore business loans

Understand the terms and conditions

Loans are a form of debt. So it’s important to know what you’re getting into.

Before you commit to any loan, ensure you fully understand the interest rate, repayment schedule, fees, collateral requirements and other terms and conditions. Take time to read the fine print and ask questions if you don't understand something.

If you need help, speak with a financial advisor or loan broker who can explain the terms and conditions in plain language. The more you know, the better set up you’ll be to repay your loan and grow your business.

Speak to an advisor

Set a repayment plan

Finally, it's important to develop a repayment plan. How much money can you realistically pay each month? Are there any prepayment options available? Answering these questions in advance will help ensure you can meet your loan terms.

Be sure to factor in additional costs, such as interest or fees. Wherever possible, set up automatic payments to make sure your loan payments are made on time.

Use our business loan calculator to see exactly how much your monthly payments will be and how long it will take to pay off your loan.

Apply for funding

Once you've identified the loan that best meets your needs, it's time to apply. To do so, you'll need to provide some basic information about your business and finances. This includes income statements, balance sheets and cash flow statements.

You'll also need to provide personal financial documents such as tax returns, bank statements and pay stubs. Make sure you have all this information in order before submitting your application.

Once you've completed the application process, wait for a response. Depending on the type of loan you applied for, it can take anywhere from a few days to a few weeks to hear back.

In the meantime, make sure to monitor your credit reports for any changes or errors. You can also reach out to lenders if you haven't received a response after an extended period of time.