Pick any name from the world’s business history, and you will find several self-made entrepreneurs who have gone a long way with their business idea. For example, Jeff Bezos left his job to run an online book store; the rest is history. But the key to becoming a successful entrepreneur is taking one step at a time.
Hurrying your way up is never an option. More than 42.6% of entrepreneurs fear failure every year due to mismanagement. So, it’s best to think your ideas through and find the best way to finance your business. Here are a few ways to help you find good financers and get your business going. Read on!
- Your assets
Personal assets are a great way to fund your business without relying on others. For example, if you own a house, you can take a loan on it from the bank and start working with the money.
However, it would be best if you kept paying the bank’s interest; any failure can lead to the bank taking your house. In addition, you can also loan money from your IRA or ISA accounts and pay back your loan interest-free within 60 days.
- Your Angel investors
Successful business people often help new entrepreneurs to venture into their start-ups with funds. While usually, such investments might seem ‘god send’, you must seriously consider such investments before taking them. First of all, this money spent by entrepreneurs is not a loan but an active investment.
And once you accept that money, you start losing your business’s control to these honchos. Stakes could be from 10% to 25% of your business. And these individuals would take chunks of money from your hard-earned money.
- Your friends and family
Your friends and family are a few of the best people to borrow money from for your business venture. Family members won’t ask for your business plans and bank statements, unlike banks. However, a few things to consider before drawing a loan from your peers and family.
Borrow money as loans from your close ones and not as equity investments. Equity investments would make your family and friends legal stakeholders in your business. And later, they can sue you if you don’t consider their opinion to run your money. So, do your homework properly before approaching your high-school buddies for money.
- A credit card
A credit card is one of the easiest ways to fund your business. Several new and strong business owners often reminisce about maxing out their credit cards to start their businesses. But there is a dark side to this story, and it doesn’t feel good to be on the other side of the story.
It’s true that you can borrow a large sum of money from your credit cards and keep paying minimum amounts to avoid complications. However, the interest is too high, and you might have to pay 21.33% interest on your loan.
- Bank loans
Bank loans are the traditional way to borrow money for your small business. That said, it’s not so easy to borrow loan from banks. But with a correct business plan, you can hatch a loan from your preferred bank and start your business.
Business or commercial loans are kind of like mortgages. You must pay a fixed interest rate for specific years until its maturity rate. However, the loan terms are too long, and you need significant collateral to borrow the money. And in case of default, they might seize your property.
- Microloans
The microloan program is popular in several parts of the world, including the United States of America. Microloans are the best options to borrow money for your new and small business. More than 170 non-profit organisations help microloan companies to lend up to $50,000 for new enterprises.
And the best part about these loans is that the interest is relatively low. So, you can prepare your business plan and contact local intermediaries for loan sanctions. And as a woman, then getting a microloan is easier, as several non-profit organisation loan money, especially to women.
- A good small business loans
Small business loans are also an excellent option for new business persons to start their businesses. As a result, small business loans are vastly popular in the USA. And section 7 (a) of the Small Business Act protects small business owners if they fail to pay their debt.
A renowned finance professor who also offers assignment help to his students states that there are more than 400 Small Business loan guarantors in the USA. And these loan guarantors, along with other committees, select deserving business owners to sanction the loan.
- Social lending
Social lending is not an alien concept to you if you are social media savvy. And if you want an online business base, social lending is a great way to fund your business. Social lending is about various websites lending money to new business owners. However, these websites are mere intermediaries between borrowers and lenders.
There are a number of social lending websites that post loan requests on their sites. And more than $361 billion in transactions can be estimated by 2022. However, these loans are unsecured; therefore, you must stay cautious while taking a loan from these websites.
Parting Words
Business loans come with their pros and cons. And while each lending procedure has its negative side, borrowing money can increase your borrower points and lead to future credit points. So, make a good business plan and start pitching your ideas to your preferred borrowers. So, please keep yourself focused and begin setting a prosperous future. You can do it!
