6 Amazing Startup Funding Options - Invoicebus Blog

6 Amazing Startup Funding Options

Starting a business is not an easy thing to do. And one must not start their business unless they are confident about their business idea. Being a business owner has its own perks as you have your own set of rules to follow and choices to make independently without any pressure of following the imposed responsibilities of your boss when you’re doing a job. For starting your business, you need to make sure that whether you’re capable of doing it with all your strength, time and money or not!

Once you have it all figured out and you are sure you have the abilities to start your business then you are ready to do whatever it takes to start it off the right foot. But the most important issue that usually comes in the way of entrepreneurs is the lack of capital.  It is the most basic requirement for any business to start. Without this, you can never turn your business idea into reality. There are many ways through which you can raise capital to finance your start-up business. But not every existing startup funding option is suitable for every business owner. Here are six amazing financing options for start-up businesses:

1. Self-financing:

All the entrepreneurs who are looking for earning profits from the very beginning of their start-up business, it is highly suggested by the experts to finance their business personally; because if they will borrow money from lenders or loan from banks its very unlikely of them to not charge higher interests. As paying back loan money along with interest rate charged by the lenders will cost you more than it should, and you won’t be able to enjoy maximum profit out of your start-up business.

There are many ways through which you can raise funds for your business on your own. Some of them are, personal income savings, liquidate your assets, and much more.

2. Traditional loans:

Everyone has not enough resources to finance their business personally. But that doesn’t mean it’s the end of the world for them. They can apply for a loan from the bank, but they need to be very careful before applying for a bank loan that fulfills all the requirements of the bank, as loans don’t easily get approved. Even if you are eligible to apply for a small business loan as you fall under the required eligibility criteria, you need to ensure the banker of your worth.

To get the loan you should start the application process earlier than you need the money. Then develop a foolproof business plan to explain to the lender why you are worth taking the risk. After that, you need to learn to sell your vision in front of them by showing them how profitable your business will be. And also, keep your personal and business credit score rating good. So always consult a professional before signing agreements for the getting the loan.

3. Partnerships startup funding:

If you don’t want to get involved in the long processes of banks for getting a short-term business loan, you can always gather some friends and family with trust and strong financial background and offer them a partnership to finance your business. Partnerships are usually considered as taking the risk over your relationships as it is most likely of you to have conflicts in the future at some stage of your business. This will not only damage your business but will also damage your business in many ways.

To avoid the massive damage to your business and relationship you should draw a legal partnership contract that will specify the roles of all the partners. Also, it should define their level of involvements and percentage of ownership in the business. This should be signed under the supervision of an attorney and by the willingness of both partners.

4. Incubators and accelerators:

There exist many incubators and accelerators firms who are interested in investing in start-up or business at early stages with the potential to grow. They invest in your business in return for some equity, so this is a good way of funding your startup. These firms are also playing a part of an intermediary between the experienced professionals and business contacts for providing you with an opportunity to grow and become successful by the guidance of these professionals. To get a loan from these firms requires you to put a lot of effort to prove them the worth of your business. Likewise, how it will be profitable. If you successfully convince them, it is more likely to get the loan applied for.

5. Crowdfunding:

There are many crowdfunding platforms available on the internet where they are playing a vital role in connecting borrowers and lenders. Kickstarter, Crowdfunder, and Indiegogo, etc., are some of the crowdfunding websites which are allowing fundraisers to run a public campaign for accepting donations as well as to get investors for their business. The campaign will be advertising the nature of the business and projects, the amount of money required to finance it, and the deadline for the campaign for fundraising.

There are so many people who donate a small amount of money to the fundraisers because of their fundraising campaign. These campaigns also consist of incentives to the donators which encourages them to donate. Apart from donating they are also using these incentives and rewards to get more and more investors to finance their projects along with getting the equity rewards, etc.

6. Friends and family:

If you don’t find using the other option available or you are afraid that you are unable to sell your vision and convince the lenders with your business plan, you can still finance your start-up business as you always have your family and friends to go to for help and assistance. You can ask for a loan from your family and friend to start your business. Or you can offer them to be silent investors in your business. It is quite easy to convince your friends and family to lend you a loan. They will believe in your idea because they always have the best interest at heart for your future.

The other benefit of using this most common way of startup funding is either you won’t have to pay interest to them. Or at least you won’t have to pay as high interest as you might have to pay to banks and another lender. You just make sure to get this deal done under the supervision of an attorney with legal contracts drawn and duly signed by both of you. Because this it is not less serious than getting a loan from any other source. It will also save you from future conflicts and damages to your personal relationship.

Conclusion

Hopefully, you can use the tips laid out in this article, to get the right financing options for your startup. Don’t worry if you don’t succeed with one way of startup funding. You should immediately go to the next most promising one. You can even try and combine several startup funding options. Just make sure you’re aware of the risks, and don’t get too much in debt, otherwise, you’re rising shutting down your freshly started business.

David Simmons

David Simmons

David Simmons is a financial analyst and accounting expert. He has in-depth knowledge about setting up small businesses as well as creating profitable investments. He regularly contributes articles related to business and loans at ebroker.com.au.
David Simmons

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