Building a business is tough; some may prosper at their first business idea, and some may fail multiple times before landing that jackpot. Nevertheless, all entrepreneurs face the same challenge: funding. It is not an easy thing to acquire. For ideas to become a reality, you need capital, a material asset to fund your business operations, and more.
Fortunately, aspiring business people have many ways to acquire the needed capital to kick-start their projects. In this article, we’ll be covering multiple methods of acquiring capital for your first business project. Read more below and get one step closer to your entrepreneurial dream.
Online Lending Platforms
With new technology, lending has innovated to access new lending platforms without relying on traditional financial institutions. Such are the digital lending sites that offer instant and online unsecured loans.
The beauty of this funding method lies in its convenience and instant approval process. After complying with their account registration and request process, having your funds in your account should only take a day or two. As simple as that.
However, digital loans offer only a small amount of loanable cash on your first transaction, which may not be enough to kick-start your business. Nevertheless, if you can find one that suits your funding needs, check all the agreement disclosures, repayment terms, and interests to ensure transparency.
Banking Assistance Programs
Most of us own at least one or two credit cards, and being a good credit owner to your bank opens up opportunities for loaning programs, such as business loan programs.
These programs vary in terms and banking processes, but they all offer a specific loan agreement suited for owners venturing into business making. This is good, especially if you have a satisfactory credit standing and your business needs significant funding.
Angel investors are high-profile individuals who have excelled in entrepreneurship and want to invest their money into promising startups. These investors are masters in their field, offering funding, guidance, mentorship, and connections from various industries.
Getting one to fund your business can be challenging, but the most outstanding value you can get from them is the learning and guided mentorships as you run your business. Agreements may differ from one investor to another, and unlike lending, they might ask to give a share of your ownership simply because they’re offering more than just money.
Venture capitalists operate the same as a typical angel investor, the difference being that venture capitalists are established firms investing in different businesses and startups through their extensive network of co-investors.
With big funding comes big requirements, and offers from venture capitalists are as big as you can get. If your business idea looks like a significant, expensive, but profitable endeavor to build, then talking to venture capitalists might be the best idea to get funding.
Patient money is just another term for friends and family loans. As the name suggests, you ask for loans from your relatives and parents, which can be repaid as the business creates profits and your family takes a share until the debt gets repaid.
Bear in mind that this is a family that we’re taking a loan from. Disputes on money and loan agreements often cause permanent scarring in family’s trust and relationship. So before you consider asking your family and friends for a loan, consider these points.
- Not all family members are willing to lend money
- They may want other loan payment forms, like shared equity or collaterals.
- Loan agreements differ, so make sure the terms are favorable to you.
- Family relationships on business and money should be taken seriously.
Government Startup Programs
Another option you can explore is the programs your state government offers regarding entrepreneurship. Many government and leadership bodies offer business loans or programs to help aspiring people in business fund their ideas and help them build capital.
By doing this, they can help the people and increase state revenue in terms of business taxes and tourism. So check on their programs at least once and see if your business model fits their criteria.
If all else fails, stick to yourself. Self-funding is an excellent way to build capital without additional burdens from loans and investors. However, a clear caveat is you have to sacrifice a lot of your time and money saving up for a long time. Take as an example entrepreneur Hari Ravichandran who funded EIG with his own money, and still managed to build his company up into an industry giant.
Ensure your job or side hustle has generated enough cash to sustain you and address your obligations while saving up. It may take time, but it’ll be worth it. After all, self-funding means no loans and no shared ownership.
Building a business can be seen as a test of patience, determination and financial discipline. And without a shadow of a doubt, how you raise your capital and how much funding is readily available spells the outcome of your startup once you open it to the public.
With these points above, you can start your business faster and acquire much-needed funding and possibly more from them. That said, start formulating your business, explore options, and get creative in pooling funds for the future of your business.