How to fund the startup is one of the leading questions when looking to start a new business. The financial aspect can pose a huge challenge, and even deter some people from realising their dream. Luckily, there is a range of different funding options that can help businesses start and thrive. Read on to find out what the most convenient funding options are, and how you can use them to start and run your small business.
Crowdfunding can be the perfect option to fund your startup business, as you don’t need to be eligible for any kind of loan. It’s easy to set up and you can ask for any amount that you require for your startup. Some of the most popular websites for crowdfunding include:
The only downside to crowdfunding is that there isn’t a guarantee that you’ll get the exact amount you need. You depend on the good will of people to donate the money to you. Also, in the case of some of these sites, such as Kickstarter, if you don’t collect the amount you asked for, you don’t get any funds, and everyone who donated gets a refund. Therefore, in order to up your chances of raising the money you need, your best bet is to promote your personal fundraising campaign on social media.
Angel financing is a financing option similar to crowdfunding, as it includes individuals raising funds for small businesses. It differs from crowdfunding in that in the case of angel financing the party offering funds usually gets ownership equity in exchange for their contribution, whereas that isn’t the case in crowdfunding. Also, the individuals who offer funds are usually other business owners with large capitals, which means that you’re likely to only need one “angel” to reach your target. However, unlike crowdfunding donators, since these investors give out huge amounts of money, they are likely to need more convincing before they decide whether to invest. That’s why you should be prepared to present your small business in the best light, so that the investor is clear about how investing in your company would benefit them.
Acquiring a personal loan can also be a great way to obtain the necessary funds to start a business. A major perk of this financing option is that these loans are easier to acquire than regular loans, there is no collateral, and you get the money extremely quickly. All you need to do is find a prime personal loans company that suits your needs and apply. Some personal loan companies offer to help you with finding the best rate possible, and take only one hour to come to a decision whether you’re eligible for the loan. In some cases, you even get the funds within a minute.
Venture capital (VC) is another viable option for acquiring funds to start a small business. Apart from providing financial assistance to startups and small businesses, VC firms link small businesses to potential clients, partners, and workers. Albeit very convenient, keep in mind that this form of funding isn’t easy to get. There are a series of factors VC companies take into account when deciding whether to fund a small business. Some of these factors include the following:
Since the requirements differ from firm to firm, it’s advisable to take your time and do some research before you take your pick. Once you’ve made sure that you fulfill all the prerequisites of the chosen company, you will need to thoroughly prepare for the meeting. These companies look for businesses that have a high chance of succeeding, so it’s of paramount importance that you present your business idea in the best way possible.
Lastly, you have the small business loan option offered by banks. There is a wide variety of small business loans, some of which are:
The small business line of credit is convenient for businesses that aren’t sure about the amount they would need for their startup. This type of loan enables you to access funds on an as-needed basis. You may withdraw as much cash as you need at any time, up to a certain limit. Working capital loans are useful for funding the everyday operations of a small company. They aren’t suitable for large investments, but are rather used as a short-term solution to facilitate the growth of a small company. This kind of loan usually requires collateral. In case you need funds to buy equipment, equipment financing can be a viable solution, regardless of whether you need machinery or office equipment.
As you can tell, there is an abundance of options for small startup businesses to raise funds. Each option has its pros and cons, which is why you ought to do some research and take your time prior to making a final decision.