As a startup business, you will no doubt be looking for ways to raise finance for your new enterprise. Some people use their personal savings to fund their new businesses, and others borrow. If you’re thinking of doing the latter, what are your options?
You can appreciate that lenders will view your new business as a high risk. After all; you don’t have any trading history, nor can you make any guarantees on future turnover. The news isn’t all bad because it’s still possible to get the money you need.
Keep reading to learn more about the various options available to fresh new startups:
Your new business may not have a proven track record, but what about you? If you’ve got a healthy credit history, and you “score” well to most lenders, you could get a personal loan. It’s not uncommon for business founders to borrow money in their name to use.
The only downside to a personal loan is that you are liable for it, whether the business survives or not. So, you need to make sure you can afford to pay it back if the worst happened.
I recommend shopping around for the best deal on a personal loan. That’s because your bank may not offer the best rate for your needs. Also, it’s worth bearing in mind that many lenders charge lower interest rates if you borrow a lot of money.
Another option, albeit a less popular one, is to buy the things your business needs with a credit card. Again, you might need to take out one in your name. But, it can prove to be a lifeline if you’ve got trouble raising the money you need.
Look for credit cards that offer introductory 0% rates on purchases. That way, you won’t have to pay interest for a short period.
Enterprise Investment Scheme
One option you may not have heard of is the government’s Enterprise Investment Scheme. In a nutshell, the way it works is simple. People invest in your new company and, in return, they get shares of it. Those investors get a tax relief on their investments, and you get the funding you need.
Many individuals choose to invest in EIS to spread their investment risks. They also do so, of course, for the tax benefits. It’s worth pitching the idea to people you know that may wish to invest in your business.
Team up with a supplier
Let’s say that you’ve come up with a brilliant way to sell someone else’s products. The trouble is; you don’t have the money to pay for the stock or logistics of it all. What can you do?
One option is to team up with a supplier. They can invest the money you need and, in return, get a cut of your profit. It’s a win-win situation for them because they get to sell their products quicker. And it’s good for you because you’ve the capital you need!