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Q: What's the best way to grow your business without taking on investors? Are there government loans out there for small businesses?
- Chris Perkins
A: The best way to keep from taking on investors is to make a profit. The second best way is to get your suppliers to give you generous payment terms so that you don’t have to pay for things right away.
Related: Â How to Raise Capital for Your Business
It is hard for small businesses to borrow money unless they have collateral that banks consider to be valuable. So, for example, if your business was a gold jeweler, a bank might consider your inventory to be sufficient collateral against which to loan you money. If your only assets are the people in the company and maybe some software they’ve written, you will have a tough time getting money from banks.
But there are sources of debt for small business. For instance, through the Small Business Innovation Research (SBIR) program, the National Science Foundation gives grants to startups that aspire to harness the value of novelty.
You might also try the Small Business Administration’s 7(a) Loan Program Â that helps small businesses with special requirements, such as exporting to foreign countries; its Microloan Program Â for small businesses and not-for-profit child-care centers; or its CDC/504 Loan Program that offers business financing for small businesses while promoting growth and job creation.
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