Looking to fund that new business idea? Here are seven great ways to do just that.
- Relatives And Friends.
Raising capital for a new business is not an easy task. However, there are various ways you can fund a business within a short period. You can start by asking family and friends to fund your business. Borrowing money from people you know is easy than borrowing from banks and money lending institutes.
Furthermore, you can also ask for a loan from friends and family, but make sure that you make it a legal matter especially if you are requesting a lot of money for your loan.
Disadvantage. The only disadvantage of using this option to raise capital is that you might end up losing friends or even the bond you had with your relatives. This usually occurs when the money borrowed is never paid on time or as agreed.
- Loans For Small Business.
According to FairFigure, small businesses can also get loans from banks and other lending companies. However, your need to be aware of the fact that you must meet all the necessary qualifications so that your loan can be approved. Therefore, it is advisable that you visit a few banks and lending companies to find a suitable deal.
Downside. Some lending companies are considered to be predatory. Therefore, make sure that you double-check the paperwork before signing any agreement.
- Trade Services Or Equity.
Having a partner sometimes is a convenient way of making money especially if you can help each other by sharing skills. There are many business owners who are willing to partner with someone who can increase productivity in their business. All you have to do is look for a business owner who you can trade service or equity with.
Downside. Trading equity or service can help you start a business but chances of succeeding are few since some business owners are not always willing to engage in such practice.
Bootstrapping is also another convenient way of starting a business and keeping it running. That is because bootstrapping requires you to fund your business using your own money. These funds can be personal savings or even credit cards. Furthermore, with this option, it will be easy to track your expenses since you can always get a report card from your bank.
Downside. Using credit cards to start a business is a big risk especially if your business does not succeed. You will be left with a huge debt to pay in the end.
- Accelerator Or Incubator.
Today, incubators and accelerators have been established around the country to assist with business programs. That is why they have been set up near colleges. These areas are often reserved for communal workspace and mentorship development projects. That is why this is a great start for a person who wants to start a business.
Downside. The programs are usually focused on businesses that specialized in advanced tech.
Crowdfunding has also proved to be another reliable way of raising capital. However, with this option, you can only succeed if you are great with the social network.
Downside. Today, many brands rely on crowdfunding to fund their businesses. Because of this reason, it has become difficult to attract more people as the number of companies engaging in crowdfunding keep on rising.
- Receive Grants From Organizations.
Sometimes grants are offered to small brands that are either run by veterans, minorities, or women. These grants are offered by organizations and small business administration. If you want to receive grants for your small business, make sure that you apply for one before the deadline. You can consult USGrants to find out if you are eligible.
Grants are not always free. Some come with a lot of conditions while others are required to be paid back within a certain period. Because of this reason, it is vital that you take time to check carefully each grant before accepting the funds and invest in your business.