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All great businesses start with an idea. An entrepreneurial spirit helps that idea to grow into a plan, and from there a viable business can emerge. At some point on that journey, a business earner is likely to need an injection of capital into their organization. This can be an initial investment, a short-term loan to help keep the business ticking over, or financing to cover equipment purchases, as well as myriad other reasons.<\/span><\/p>\n Deciding which finance option is best for your business can be a minefield. In this article, we will look at some of the most common methods of bringing resources into your organization.<\/span><\/p>\n Startup business loans<\/span><\/i><\/p>\n As the name suggests, this type of finance is appropriate at the start of the life of a business. Your initial investment is crucial to onward success, so it is important to ensure that you have sufficient capital to get going. This type of loan, which is usually up to $150,000, is ideal for people who do not have business credit history, but do have a favorable personal credit score. Most startup loans do not require assets to be secured against it; however, if the loan is taken out to purchase equipment, this will become collateral.<\/span><\/p>\n Personal loans for business<\/span><\/i><\/p>\n Under this arrangement, the company owner takes out a personal loan, with individual liability, but the loan is used for business purposes. These are usually up to a value of $100,000. Similarly to startup loans, a lack of business credit history is not a limiting factor, and the application process is generally straightforward. It is worth noting, however, that if the business is unable to pay back the loan, it will have a negative effect on the credit score of the individual taking out the loan.<\/span><\/p>\n Short-term business loans<\/span><\/i><\/p>\n There are occasions in the business life cycle when cash might be in short supply. This could be in response to unexpected bills, a sudden need for new supplies, or a temporary downturn in revenue. In order to keep the business ticking over, it may be necessary to inject a small amount of capital; perhaps to cover wages, payments to suppliers, repairs to equipment, or overheads. Most short term business loans<\/a> are relatively small, but they tend to incur higher APRs than other types of finance.<\/span><\/p>\n Business credit cards<\/span><\/i><\/p>\n When making purchases for a small business, it may be tempting to utilize a personal credit card, in the interest of simplicity. However, there are credit card accounts designed specifically for the unique purchasing needs of a business, which are worth considering to ensure that personal and business finances are not blurred. Business credit cards generally have higher spending limits, employee cards linked to the account (which make expenses far easier to manage), and employee spending limits. It is usually the case that a business credit card will still require one person to take personal responsibility for the account in case the balance cannot be paid, which needs to be carefully considered before pursuing this type of finance.<\/span><\/p>\n