Click on Finding money to fund your new company can be interesting
for the source.
Author: Ravi Philemon
Finding money to fund your new company (or an existing company) can be an interesting experience. A good business plan can help you determine how much money you need to get started. Truthfully, most new businesses are started with the owner’s own cash, credit cards, friends and family, etc. without any type of plan whatsoever.
By: Phoenix Lee/
However, if you are a business owner finding money, there are some methods for you to get the money for your new company.
1. “Bootstrapping” or Business Funding Services
The dictionary definition of bootstrapping is “To promote and develop by use of one’s own initiative and work without reliance on outside help”. Most small businesses are started with nothing more than the owner’s own money, work, and debt (usually credit cards, home equity loan, etc.). This is also jokingly referred to as “sweat equity”.
To get their venture launched, entrepreneurs have utilised many methods for startup capital, these include but are not limited to:
- Credit Cards
- Friends and Family
- Home Equity Loans
- Personal Notes or Loans from a Bank
- Small Business Investors (Private Limited Companies and Limited Liability Companies are perfect for this because they can sell “shares” or “interest” in the company to help fund the startup phase. (NOTE: friends and family can be investors as well)
- Cashing in Stocks or Bonds
- Government grants for small businesses
There are also companies that specialise in helping entrepreneurs in finding money by coaching them through the approval process and informing them of all the options available.
2. Small Business Administration or Bank Loans
Many small businesses are started with the help of a bank loan or a Small Business Loan from the Government backed loan schemes. Government backed loan schemes are loans from a private bank with the Government as the “guarantor” of the loan. This means that the Government will absorb some of the risk on behalf of the small business.
Finding money from your bank is fairly straightforward: simply call or visit your bank and ask about the requirements for getting a small business loan. Depending on the bank, the loan process may be fairly easy or extremely complex.
3. Venture Capital or Angel Investors
Some business ideas are so good and have so much potential that obtaining venture capital may be the way to go. In this process, the entrepreneur submits his business plan to a venture capital firm (or more than likely, knows someone who knows a venture capitalist). The venture capital firm will review the business plan and, if interested, offer to provide startup money (usually well over $100,000) in exchange for an equity stake in the company.
Anyone familiar with the “dot-com boom” of the late 90’s knows that this can be a long and difficult process but the rewards can be astronomical. Companies like Yahoo! and Amazon.com were funded in this manner (and their founders are worth billions), as well as many other companies you are familiar with: FedEx, Google, etc.
This is not to say that you need venture capital to become a great company. Most of the large businesses you are aware of started as a small business with little or no help, then obtained venture funding or “went public” after they had grown relatively successful.
Another source is what is called the “angel investor”. This is usually a private investor who has considerable amounts of money to invest in new business ventures, the proverbial “rich uncle”. Most people don’t have access to these types of investors but we’ve listed some resources below.
Finding money besides bootstrapping may seem odd when you have already got personal savings. But you saved that money for a reason — perhaps to fund children through education or provide for your retirement. Whatever that reason is, if you tie up that cash in your business, it’s not available for the original purpose. Taking out credit for your business offers a number of benefits and can improve your chances of commercial success.
Most financial institutions and non-traditional lenders disclose their minimum requirements for lending. If you meet a lender’s minimum qualifications and want to see estimated rates and terms, you can pre-qualify for financing. But pre-qualification is not the same as putting in an application for personal loans.
You may pre-qualify for a loan and yet your loan application may be rejected once you put in a formal application – and the more formal personal loan applications you put out, the more the impact is on your credit score. This is why you need a loan consultant to help you in finding money.
How to Secure Small Business Loan Quickly
If you are searching for a small business loan, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.
To find out more about Peer to peer lending versus that of SME loans so as to make an informed decision: SME Loans or Peer-to-peer (P2P) Lending – What is the difference?
Contact us for advice on a new SME loans.
Contact us for home loan or refinancing advice.
The post Finding money to fund your new company can be interesting appeared first on iCompareLoan Resources.