Tips For Small Business Owners

(CBS)  With the recent credit crunch, small business owners are having a tough time getting loans. Colleen DeBaise, Small Business Editor for SmartMoney.com, has some tips for funding your business in tough times.

If you're a small business owner who's been turned down for a loan by a bank, don't panic - you do have other options. First, consider a microlender. "Microlenders are non-profits," says DeBaise. "They're generally funded by charitable institutions, government grants." Microlenders usually give out small loans - anywhere from $5,000 to $25,000. You might receive some financial training as well, but DeBaise considers microlenders a great option.

Peer-to-peer networks are another option. Business owners usually create a profile online discussing their business, how much money they need, etc. People with money to loan then decide who they want to lend it to. The one drawback, says DeBaise, is that these are personal loans. They won't help your business credit and may actually hurt your personal credit in the process.

Merchant cash advances are a source of funds as well. "This is for a business owner who does a lot in credit card sales," says DeBaise. Interest rates on merchant cash advances can be very high, so be careful. Factoring companies lend businesses the cash they need right away, but the business owner then has to shift a portion of their credit card sales for the next several months back to the factoring company.

Small business owners can also look for loans at credit unions. They work a lot like banks, but on a smaller scale. "They're really trying to tap into the small business market," says DeBaise.

Lastly, try private lenders. These are non-bank companies willing to lend money to business owners. "They'll look at different criteria than maybe a bank would, so that's also a great choice," says DeBaise.

For more information on getting a small business loan, as well as additional personal financial advice, click here to visit www.SmartMoney.com.



By Erin Petrun