VBR is kicking off a series with SCORE, a nonprofit organization fostering vibrant small business communities through mentoring and educational workshops. The nation’s largest network of volunteer, expert business mentors helps small businesses plan, launch, manage and grow.
In this SCORE Q&A, we hear from Pete Carvell, a SCORE mentor, leader and past district director.
Q: What are some options in financing a small business?
A: There are several ways to get financing, including a loan, investor financing, crowdfunding, friends and family, and even yourself.
Q: How could one provide their own financing?
A: You could use the equity in your home via a home equity line of credit, but this is definitely risky.
Q: What about the traditional financing via loans? What are the variables to influence one’s ability to borrow if they qualify?
A: Rates will depend on your personal FICO score and the amount of debt you already
have.
Q: Crowdfunding seems to be a popular option these days, especially online and via social media, as well as among friends, family and acquaintances. What makes a business attractive to crowdfunding?
A: With crowdfunding, there is a lot of competition. The key is to be “sexy” and in demand, i.e. sustainable, eco-friendly, etc. With friends and family (another financing option), they know you and could help via a loan or percentage of ownership.
Q: Lastly, tell us a bit about investor financing.
A: Very few investors finance startups. There has to be a viable working model and you will give up a significant percentage of ownership.