Building up your inventory for the holiday season, remodeling, expanding — all good reasons for your business to need additional capital after you’ve already got it up and running.  But in today’s economy it can be particularly challenging to find a source for funding, especially if you want to avoid using credit cards that carry a high interest rate.

According to SmallBizTrends, the majority (over 51%) of small businesses today are looking to their own savings or to family and friends for money to expand. The traditional source of money for this need in the past has been banks, backed up by guarantees from the Small Business Association. The SBA does still make a large number of loans to both startup and existing businesses. They have special funds targeting minorities such as African Americans, Hispanics, Asians, Native Americans, women, veterans and rural residents.

American Express provides help for small retailers (in addition to their wildly successful Small Business Saturday, which this is will take place on November 24), on their Open Forum web site. Among the articles that you might find useful is one by Barbara Weltman about how to procure a loan. It includes tips on how to get your financial records in order before submitting your application to a bank for an SBA loan.

And now American Express is aggressively entering the field of lenders to small businesses itself, in order to expand the number of independent retailers accepting their credit cards. We’ve gotten several phone calls and e-mails about this program, which offers short-term loans based on a percentage of your American Express charge volume.  Repayment is automatically retained from a portion of your charge card sales, along with a 6% fixed fee. If you are interested, here is a their link to their merchant financing program.

No matter where you decide to borrow money for your business — whether from your Uncle Paul or from Uncle Sam — be sure set up the loan formally, with a plan as to how you will repay it in a timely manner. Figure the cost of the money into your expenses, and budget for regular payments. For many years part of our Christmas Eve ritual was to take a check across the street to Associated Bank to finish paying off our seasonal line of credit, and it was a gift to ourselves to know that was repaid in full for another year.

Happy Retailing,

Carol “Orange” Schroeder