Before creating a budget for your startup business, it’s important first to find effective ways to fund your business. While you probably have personal savings, there are other options to fund your business if ever you need extra or a backup, or you simply don’t want to drain your family savings.
In this post, you’ll learn some helpful tips to fund your startup business.
1. Use Your Personal Credit Card
Do you have a business idea but no money to start with? How about using your credit card? Yes, it’s possible to use your credit card to fund your startup business. It’s fast, efficient, and flexible. If you have a limited budget, one way to quickly carry out your marketing plans is to use a credit card.
Here are the benefits of using a credit card to fund your business instead of traditional funding methods:
- Flexible Payment: With credit card payments, you can pay in installments, like monthly, which is due once a month, and unline other financing methods, you’re not required to pay the total balance.
- Quick Funding Source: One of the fastest ways to get quick money is using the revolving credit of your credit card. Credit cards for beginners are as good as cash, most especially those with zero annual percentage rate or APR or zero interest rates.
- No Collateral: Using credit cards for business purpose are unsecured, which means that you don’t have to offer any collateral or deposit.
2. Small Business Loans
If you’re planning to venture into a small business, some banks offer loans. However, it can be difficult for novice entrepreneurs to quality. But you have other options, such as alternative lending companies with less stringent requirements. Before signing anything, make sure to read the terms and only work with legitimate lending companies to avoid high-interest rates.
For those who have a knack for social media marketing, crowdfunding is a great option to encourage people to invest in your business. It’s a great way to finance a startup business through donations, loans, and exchanging money for shares or rewards. There are crowdfunding websites that can help budding entrepreneurs kickstart their crowdfunding campaigns.
Here’s how to crowdfund your business:
- Proper Planning: Like a business plan, you should plan your crowdfunding campaign carefully. You’ll need to show people what your product is and the good reasons why they should fund your business (e.g., incentives, shares, or rewards). Also, you have to set a specific timetable when you would start developing the product once you have reached your funding goals.
- Goal Setting: Setting realistic goals is important to manage proper expectations. Set a clear goal as to how much money you’ll need to finance your business, the timeframe needed to get the funding, and the length of time you’ll need to develop your product.
- Legal Compliance: Make sure to follow the law when venturing into any kind of business so people will trust you. Terms should be clear and checked by a lawyer as much as possible to avoid legal issues later on.
- Choose a Crowdfunding Website: Choose a crowdfunding website that meets your business needs and post your crowdfunding campaign.
4. Family and Friends
The closest people in your life can help you fund your business too. They can even lend you money without interest. Just make sure to pay the specified date you’ve agreed upon. Also, they can use their credit cards too to help you buy supplies, tools, and equipment for your business, and just pay them every month.
5. Get a Business Credit Card
Get a business card and use it to keep track of your expenses. A business credit card is a great alternative to using a personal credit card. One of the most important reasons for getting a business credit card is to grow your business operation.
The decision of the bank on your small business credit card application is usually dependent on the applicant’s personal credit profile, considering your credit score and total income when evaluating your credit card application. Usually, being approved for a personal credit card would mean a higher probability of getting approved for a small business credit card.
Indeed, there are plenty of ways to fund a startup business. You can use your personal credit card or apply for a business credit card to get fast money and enjoy flexible payments. Also, you can choose to set up a crowdfunding campaign or ask for support from family and friends. Choose the best one that suits your needs and preference.