Most business people admit that the most challenging part of growing a business is funding its activities. Luckily, entrepreneurs have a variety of options to choose from when it comes to funding small businesses. North Carolina offers entrepreneurs a variety of financing sources ranging from regional loan programs to crowdfunding platforms.
Here are five ways you can finance your small business in North Carolina;
1. Crowdfunding
The North Caroline Providing Access to Capital for Entrepreneurs and Small Businesses (NC PACES) Act provides startups with an opportunity to benefit from crowdfunding. In 2016, the General Assembly unanimously passed it into law. Since then, crowdfunding has developed significantly to finance many sectors of the state economy. Because of the NC PACES Act, you have the chance to grow your business because of the many investors available on Crowdfunding platforms. LocalStake NC is a North Carolina based crowdfunding platform, allowing businesses to raise capital from people within their community. Localstake provides deal structuring, offering documentation and a platform to facilitate the raise process. There are a large variety of crowdfunding platforms even for your specific niche. Check out the list below for more platforms:
v Fundable
When seeking investments via crowdfunding, be sure to stay aware of local regulations, as this is regulated at the state level.
2. Bank Loans
With a satisfactory credit score, you can qualify for a bank loan in North Carolina. If you want to open a limited liability company (LLC), you need some substantial assets. In North Carolina, when you approach a bank, you have to show your revenue and expenses, so that the bank can gauge your eligibility. The good news is that North Carolina has a variety of banks willing to give you small business loans.
3. Small Business Administration (SBA) Loans
In case you fail to acquire a bank loan, you can try obtaining a Small Business Administration loan. A variety of North Carolina's banks provide small businesses with SBA loans. These loans help businesses that cannot access funds from other platforms.
SBA loans follow different regulations. For instance, under the SBA 7 (a) loan (which is the most popular), most of the loans do not exceed $5 million. To qualify for SBA 7(a) loans, your business must meet specific requirements such as having a net income of less than $5 million and being debt-free.
4. Strategic Partnerships
Suppose you realize your startup can generate sales opportunities for another company. Then, chances are that company is interested in financing your business through the formation of a strategic partnership. However, strategic partnerships are more practicable once you launch your business and can demonstrate your capability to partners. It is vital to document the agreement between you and your partner for legal reasons.
5. Angel Investors
This investment is a private equity form of investment focusing on businesses in their initial stages. If your startup is innovative-focused, and you want it to grow fast, angel investment is an excellent fit for you. Examples of companies that have benefited from angel investors include Google and Facebook.
Angel Investors, just like strategic partners, usually want something in exchange. You might have to give investors ownership equity and/or some power over decision-making. Therefore, it is vital that the angel investor who invests in your business shares your goals and vision for the company.
If you need funds for your business, please contact and consult an attorney before settling on which financing source to approach.