Starting a new business can be the most fun thing you’ll ever do as well as the scariest thing you’ll ever do. Essentially you’re venturing into the unknown and taking a risk, but as we all know the bigger the risk you take, the bigger the reward you can gain; so good on you!
One of the biggest challenges you’ll face will be how to fund your new business. We are going to explore the different options and hopefully this article will give you some ideas.
In addition to funding, you should make sure that you have a robust business plan for you to be successful, some funding routes may mean you’ll need your plan to get the funds. As the old proverb goes: fail to plan, plan to fail! The main factors that you need to include in your business plan are: An outline of your idea, route to market, your market analysis, USP and a breakdown of what funding you’ll need an what it’ll be used for.
Below are some ideas for funding:
Some banks are very strict with loans. Individuals who have a good credit score can easily get money from banks. In addition to this, they are required to be in good shape with their finances. Having assets is another great advantage for those people who want to borrow money from banks. Some of the best banks in the United States include J.P Morgan Chase and Huntington Bank.
So you could consider getting a Personal loan, traditionally these are slightly different to bank loans and are usually provided from third party companies; interest rates are usually higher but acceptance rate is also a lot higher meaning if your credit score isn’t the best this is a good option for you to consider. One company example is: 1 hour loans direct. These guys essentially offer pay-day loans. However these loans can also be used to fund your business. Applications for these types of loans are usually a lot quicker than banks so you should know within minutes if you’ve got the money also you’ll get payment within an hour which is very swift!
Some business people have been using credit cards to finance their businesses. The process of getting approved doesn’t take long. Again, the minimum payments for these cards are relatively low. It is one of the attractive options for those people who want to get their businesses up. However, borrowers should be very careful not to fall behind on payments. Missing one payment can severely affect one’s credit score.
Friends and family
This is another common ways of funding one’s business, especially when starting one. This involves hitting up to one’s family or friends who have enough money to spare. The money you obtain from your friends or loved ones has no or low-interest payments. However, you should avoid taking advantage of your family or friends.
Home equity loans
Homeowners can use home equity loans to start new businesses. No one is restricted on how to spend the money obtained. These loans have lower interest rates and flexible payment options as compared to the conventional loans.
Individuals who cannot secure funds from banks and other sources should seek microloans. With these loans, you don’t need a lot of documentation as with banks. Business people can obtain micro-lenders from micro-lenders such as Square Capital.
You can use this loan to start a small business. The funds obtained from Small Business Associations can be used in purchasing new pieces of equipment. The advantage of SBA loans is their favorable terms and low interest rates.
The financing methods discussed above will help you in choosing the most suitable option when starting a new business. This will give you a better understanding of the terms and requirements of various types of financing methods. Business people are advised to make their payments in time to improve their credit rating.