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Startups take money and getting your new business idea off the ground can mean having to be a little thoughtful about where to get funds. So, here are some good ways to pay for your new company,
- From Friends and Family
Your family and friends may be thrilled at the idea of you starting a business, and even be willing to fund it. Convincing them to invest in the business is easy too. Some of the large companies you see today began as a family business.
While it may be easy to convince your friends and family to fund your business, they still need an assurance that they’ll get their money back. This is especially important if taking a loan from them. You’ll, however, need to be careful with loans from family and friends. The relationship may turn sour should you fail to repay them.
- Small Business Loans
Some banks may be willing to offer small business loans. Although most banks are particularly careful lending to small businesses, some of these do. It can however be hard to qualify for their loans. Alternative lending companies may also come in handy in funding your business. Several risks are however involved when lending from an alternative lender. That said, you need to be careful with who you borrow from before signing the contract.
- Trade Services or Equity
You can also get funding by trading your services or equity with another business. Your company might be offering a service, and another requires the service or vice versa. Striking a deal with the business owner can see you achieve your goal, simply trading service or equity.
This isn’t however a fool-proof way to get financing for your business. Some business owners may simply decline your offer, or take advantage of you.
Bootstrapping is one of the most common ways to fund a startup. This basically means using personal funds to run the business. This could be money from your savings, low-interest credit cards, mortgages, using TNL who provide auto title loans in el monte etc. Be sure to get a free credit card report to evaluate your financial stability. You don’t want to take loans for the business only to end up bankrupt or unable to finance the same. Using the report, you can calculate loan interest rates, and whether you can access affordable credit.
The only downside with this method is that should the business fail; you will be down with a substantial debt to manage.
- Accelerator or Incubator
Business incubators and accelerators provide an easy way to start a business. These are basically part mentorship development centers and communal workspaces mostly located near colleges. Finding someone to partner with, or even fund your business might be easier here, but only tech-focused. Most of these incubator programs support only tech-related business. This means it might take you some time to find a program that works with your company.
Crowdfunding is a viable option for this with lots of social media presence. You however need to sell your idea just right for people to ‘donate’ towards the course. Websites like Indiegogo and Kickstarter were once a great avenue to pull funding together. With many companies targeting crowdfunding, collecting up enough money to fund your business might be a challenge.
Lots of companies create a crowdfunding page each week. This means your company might be choked up by the buzz on these crowdfunding pages. You also need to be careful when using this as a way to fund your startup. There is a bigger risk of frustrating backers and even overextending yourself, issues that could lead to hatred.
- Small Business Grants
Your business might be eligible for small grants from the Small Business Administration and other organizations that provide funding to small businesses. Veterans, minorities, and women entrepreneurs qualify for such grants. Be sure to talk to your local Chamber of Commerce or SBA Chapter to see what grant money you do qualify for.
Be sure to read the fine print before signing the dotted lines. Some grants will require you to pay the money back, while others don’t. Reading the fine print gives you an idea of what you are getting into before accepting funds.
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