There’s a lot of great material online about small business funding. However, relying on the wrong information can cause long-term problems for your company. Avoid these top 4 mistakes when searching the web for financing options.
Once you’ve taken the steps to determine what kind of business you want to start and have created a business plan, finding the best financing option for you is likely your next step. Like many entrepreneurs in today’s digital world, you might be considering turning to online business funding. Fortunately, most banks, financial institutions, or third-party advisors have a wealth of information about their business funding solutions.
Top Mistakes to Avoid with Online Business Funding Solutions
1. Only relying on your bank’s website.
Chances are you have an account with your personal bank for a reason. Whether you’ve been banking there for a long time, enjoy their services, or just don’t feel like switching, you’re probably comfortable there. However, your personal bank may not be the best place for obtaining small business funding. That bank’s website certainly shouldn’t be the first or only place you go to research online business funding options.
Instead, use your online sleuthing skills to learn about what types of financing are right for you, rather than where to get it. Even if you had one type of business funding solution in mind, you might find that a different one or even combining methods better suits your long terms needs. For example, after learning about the cost of carrying different types of capital, some business owners decide to pursue equity financing rather than traditional debt financing.
2. Not calling to talk to someone.
Whichever company you choose to partner with for small business funding should be just that — a partner. Though we’ve all gotten extremely comfortable interacting online and potentially a little uncomfortable talking on the phone or in person, it’s crucial that any company you’re seriously considering for small business funding solutions, you make a call to.
One reason for this requirement is that as a small business owner, you might have immediate needs or fires that need to be put out, and it’s so important you’re able to actually get ahold of someone. Also, having a conversation with someone is the best way to get a sense of that company’s values and customer service. Having a phone call with someone will confirm the warm feelings you gathered from the website as well as provide you with additional information about your financing options — if not, it’s time to look elsewhere.
3. Skipping review sites.
It’s fair to say that most online reviews should be taken with a grain of salt. If a review seems too good or too bad to be true, it probably is. That being said, there’s still a lot of value in reading about other small business owners’ experiences when looking online for funding. For example, if you notice a pattern of the same type of comments, whether positive or negative, it’s more than likely going to mirror your experience as well.
Beyond user-review sites like Yelp, Google, and Facebook, it’s also wise to look at reviews from other businesses that research and compare types of funding as well as the funding companies. Small business-focused sites such as Fit Small Business, Value Penguin, and Nerd Wallet provide detailed reviews of the pros and cons of different funding vehicles as well as their providers. This type of review can be useful for more popular types of funding such as SBA loans as well as lesser-known ones such as 401(k) business funding.
4. Not using a prequalification tool.
One of the most valuable, yet overlooked, online business funding resources are pre-qualification tools. In just minutes you can learn both how much and what kinds of small business financing you’re qualified for, which is often more than you may assume. Hopeful small business owners who utilize the Guidant prequalification tool are often surprised they’re eligible to combine financing methods to increase their overall buying power. For example, some entrepreneurs believe they don’t have enough cash on hand to cover the down payment for an SBA loan. However, if you qualify for ROBS funding, you can then use that money as a down payment for an SBA loan — all information that’s readily available in the summary you receive after completing the pre-qualification tool.
The Internet is a great place to start your search for online business funding. Using online resources like pre-qualification tools and user-reviews can get you started on the right track or funding success. However, remember not to fall into the trap of only going to sites you’re familiar with or not talking to a real person. How you fund your business is an extremely personal decision, and you should feel supported along every step of the way.
Best Online Business Funding Options
- SBA loans
- Rollovers for Business Start-ups (ROBS)
- Traditional Small Business Loans
- Unsecured Loans
- Lines of Credit and Credit Cards
- Portfolio Loans
While most funding transactions can’t be handled completely online (we’ll discuss why they shouldn’t be) from the comfort of your computer, you can start your search online for many funding options.
However, as you search for online business funding, it’s important to keep in mind that just because something seems easy or if you come across a popular site, the information you see may not be the best choice for you. Keep these commonly made mistakes in mind as you peruse the Internet researching business funding solutions.