Financing a business is one of the most challenging activities in running an enterprise, so much so that many businesses have gone down due to lack of funds. Sadly, this is a situation that could have been avoided if the owners knew where to source for funds. Some of the most dependable ways to accessing finance for a business include:
Seek help from angel investors
Start up business people can benefit greatly from the assistance of angel investors, as these are successful entrepreneurs who seek to give back to the community by financing new businesses. Angel investors are advantageous since they do not charge any interest rates on their finances—after all, the finance is not a loan, and this saves the businessperson from worries associated with payment of interest. Usually, these investors buy stock in the businesses that they finance. Somehow, this is beneficial to these businesses since the investors bring unrivaled experience in business, which could be helpful to these business upstarts.
Make use of credit cards
Most people cringe at the idea of financing their businesses with their credit cards, and this is out of the fear of accumulating debts and worsening their credit scores. However, such problems can be avoided with some wise thinking, like enlisting the use of a 0% balance transfer credit cards is a case in point. It saves people from interest rates that are levied when balances are transferred from one credit card to another. They also save the entrepreneurs from the dangers associated with accumulating debts on different credit cards.
Crowdfunding is another efficient way of raising funds for your business, it goes through websites like Kickstarter.com, and it is possible for people to solicit funds for their projects. By enlisting their projects on this crowdfunding site, their families, colleagues, or friends would be able to provide them with financial support for their projects. One way of gaining more funds is by offering incentives to people who have decided to make their donations.
Look for a bank loan
In modern times, obtaining a bank loan has become a painstaking process for many entrepreneurs, and most of them are discouraged by the rigorous application process that offers little chances of success. This method would still be worth a try especially for people with perfect credit scores, as such individuals usually have great chances of fulfilling the lending standards. Furthermore, banks like the Bank of America and Morgan Chase have loan packages that cater to small businesses.
Enlist the help of family and friends
The importance of having family and friends comes to the core when looking for business funds. Entrepreneurs can solicit the help of these people in financing their enterprises, and chances are that some of them could be more than willing to donate towards this cause. Nevertheless, a business plan is important to convince them of the viability of the enterprise.
Business people who fail to secure a loan from a bank can turn to a micro loan. The loan, offered by the Small Business Administration (SBA), caters to small business owners who fail to secure a bank loan. These SBA loans range between $100 and $35,000 with a maximum interest rate of 13%. Those seeking to apply for the loans must ensure that their businesses meet the threshold of a small enterprise as set by SBA. Since these loans are availed through intermediaries, businesses must be within the vicinity of an intermediary.
Melisa Cammack is a business owner, mother of three, wife of 13 years, and hoping to be a published book author by the end of 2013. She is a Seattle native (go Seahawks!) that relocated to Western Australia last year, and is immensely enjoying the beautiful Australian weather.
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Category: Startup Advice