How to get funding for a startup business as you consider everything? The question of money will be one of the main issues you must address.
It would help if you looked at the big picture in the early days of your new business startup.
Most businesses fail in the first two years either due to a lack of knowledge of running a business or lack of money. Let’s talk about getting funding for a startup business so you can get busy making money.
Could you finance your business startup costs from your credit cards? This happens more often than you might think.
If you have multiple personal credit cards, choose one with a large credit limit and use it specifically to finance your business. You may want to consider applying for a new credit card that you can use 100% for your business as well.
One of the significant advantages of funding a startup business with credit cards is how quickly you can begin using them to finance things as they come up. Another advantage is you only have to make a minimum payment every month, so you do not have to worry about the principle when you’re first getting started.
One of the disadvantages of using a credit card is the interest rate. If you carry a high balance for too long a period, this could become negative and affect your profits.
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Home Equity Loan
If you have equity in your home, you may want to take out a home equity loan and finance your small business with that money.
This can be an excellent option because interest rates on home equity loans are lower than commercial interest rates on business loans.
Consider establishing a home equity line of credit as well. Knowing that you can access funds quickly if you need them can be helpful not only in your initial startup phase but if you need cash flow at certain times in the future.
Raising small amounts of startup funds from a large number of people is one of the benefits of using crowdfunding to get your business off the ground.
Kick Starter is one of the most well-known sources of crowdfunding. Fundable is another excellent source of money for crowdfunding.
Many startup businesses are not sure where to go to attract investors. If you’re willing to trade out in equity for a startup, funds crowdsourcing gives you access to thousands of potential investors for your idea. Donation-based and reward-based crowdfunding are other options if equity is not something you’re willing to give up.
Thanks to the Internet, you can find services that lend money to businesses in need. This has become a popular way to fund a startup instead of going with a traditional business loan.
Another of the primary advantages of using an online lender is how quickly the process can be completed. One of the chief complaints that new businesses have when taking out a traditional business loan is how long the process can take.
U.S. Treasury Secretary Larry Summers has said in the past that online lenders will reach more than 70% of all small businesses in the United States. This should give you confidence in knowing that these companies are more aggressive in approving loans and doing it quickly.
There are times when a new business startup already has orders for its products. They need money to get the business off the ground and fill those orders. Some companies use factoring and invoice advancing to make a startup loan.
You used the money to get your products ready and sold to your customer. You then pay back the money plus interest. This is ideal for businesses dealing with suppliers and having a gap when the work is completed, and the invoices are collected.
Family and Friends
Many businesses have been started with loans from family members or friends willing to help get your business off the ground.
This can be a quick source of funds and often an excellent alternative to other forms of financing a startup business.
As with any loan, your family and friends need to be aware of the risks and the benefits.
You should put together a comprehensive business plan so your family and friends are dealt with professionally, just like a lender would be.
Start A Side Business
The Internet offers tremendous advantages for people who want to start a side business to generate money to finance their primary new business startup. The side business could continue to be a source of revenue in the future as long as it doesn’t take up a lot of your time.
Of course, an Internet business is always open for business 24 hours a day, so it can continue to run in more of a hands-off manner once you have it set up and operating efficiently. One of the great things about using your money from a side business is not having to worry about dealing with investors and paying them back from future profits.
Do you have something of value you could sell to raise money? For example, you might have a car that you don’t use that often that could be sold and used as a source of funds.
Maybe it’s an excellent time to clean up around the house and sell some items on eBay or Craigslist. Doing this allows you to kill two birds with one stone.
As you can see, there’s no set way to go about raising funds for your startup business. You can be as creative as you need to be!
PS: No credit card needed!
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