Financing methods for Start ups
Many aspiring entrepreneurs have an idea for their business but lack the capital to actually start it. Brand-new businesses with no cash flow are often turned down for bank loans, and even if your business is established, funds can still be tough to secure. Loans funded by the Small Business Governmental Administration (depends on the country) are usually more accessible.
So what options are left for someone to be a small business owner? Here are six options beyond bank loans for financing your startup.
Online lenders have become a popular alternative to traditional business loans. These platforms have the advantage of speed, as an application takes only about an hour to complete, and the decision and accompanying funds can be issued within days. Because of the ease of the lending these companies are expected to reach majority of small businesses.
Angel investors invest in early-stage or startup companies in exchange for a 20 to 25 percent return on their investment.
Venture capital is money that is given to help build new startups that are considered to have both high-growth and high-risk potential. Fast-growth companies with an exit strategy already in place can gain up to tens of millions of dollars that can be used to invest, network and grow their company frequently.
Crowdfunding on sites such as Kickstarter and Indiegogo can give a boost to financing a small business. These sites allow businesses to pool small investments from a number of investors instead of having to look for a single investment.
Make sure to read the fine print of different crowdfunding sites before making your choice, as some sites have payment-processing fees, or require businesses to raise their full stated goal in order to keep any of the money raised.