You have a great idea for a new company, and all you need is a little capital to get you going. However, how do you go about securing that funding so you can achieve your ambition? There are many ways to get the funding you need, but here are a few tips to get you started.
Maybe not the best solution, but many small businesses are started by people investing their savings into the company. There are benefits to using your money, for example, you will not have any debt. Another good thing is that you will not have any shareholders or investors to please. The only catch is if it goes wrong, you lose your savings and your personal finances could be greatly affected.
Friends and Family
They say you should never borrow money from friends or family, but there are times when it might be a good thing. Friends and family can always support you if they have the means. They can also give you the moral support you need, and they will be more flexible with repayments then a bank would be. However, if times get hard, it can strain relationships, so you need to think about it carefully.
The route that a lot of new business owner’s use is bank lending. You will need to provide the bank with the evidence that this will be a successful business, and of course, you will be charged interest on any loan you get. The other type of private loan is with a company such as Merchant Cash Advance who provide loans to businesses that have been around for over a year, and are ideal for business with a high credit card volume. Although they are not for business start-ups, they can help get you through the tough early period.
These are people who have successful businesses and want to help others get started. It might just be one person or a group of individuals who will loan you the money in exchange for shares in your business. This is a good way to get started, but some people do not want to give up part of their company and profits to others. They are usually silent partners in the enterprise, or they want to have a hands-on role. You should work all these details out before you agree on anything.
You can find many grants available that are tailored to new businesses. Some are government backed, while others are set up by private companies. They are commonly obtained by an application process, which you need to detail your new venture and what you are likely to make each year. They can be an excellent way to securing initial funding to get you started; then you can progress from there.
Obtaining the financing of a new business can be incredibly difficult, but if you can get past that, you have a good chance of success if you have a unique idea. Whichever, way you choose to fund your business, you need to allow for an extended period before you make any profit.