Let's say you wanted to open a retail store, or you need some additional inventory or equipment for your existing one – for example display hooks – but suddenly, you realize you need to raise some money.
In that case, it is good to know some funding options.
## Use the Money You Already Have
That's possible if you are already running a business and it's doing so well that you can afford using that revenue to expand. But be careful while diverting your current profits into new projects so that you don't make your existing business suffer– maybe it would be better to wait a while or think of some other ways to raise money.
## Use Borrowed Money
If you're in a position where you have to get a loan, you'll have to consider which type of loan is best for you. It's important that you have a clear understanding of how your loan will work.
Loans are broadly categorized as SHORT-TERM and LONG-TERM loans, as well as UNSECURED and SECURED loans.
To put it simply, short-term loan has short time to be paid back, and long-term loan has a long time to be paid back. The short-term one you'll have to repay in full, while the long-term one you can repay on a monthly basis.
When you take out a secured loan, you have to use something of value that you own, like your car, home, or other valuable personal property. This is called collateral. The lender holds the title or deed to the collateral or places a lien on the collateral until you pay the loan off in full.
An unsecured loan is money that you borrow without having to use something of value that you own as collateral.
### Line of Credit
A line of credit (LOC) is money available for you to borrow. Instead of borrowing a specific amount of money and paying it back over time, the lender allows you to borrow any amount you need (up to your credit limit), whenever you need it. The concept is similar to a credit card.
## Where Can You Borrow Money?
The first ones you can ask for money are, of course, your family and friends. The second ones are banks and credit unions. But they may not be so flexible and easy-going as your relatives - you will have to stand up to their measure of suitable borrower.
You could also try lending money from some non-traditional lenders; they are particularly attractive to small businesses because you don't need to have a perfect financial status and the loans can be approved almost instantly. they wil come with higher costs of course.