Starting a new business is a significant milestone in any person’s life but also a very stressful one. A new idea is a blooming bud that could turn into a garden of opportunities for the business. It is the beginning of a new venture that could also become one’s life upside down, especially if the startup funding is not adequate.
Although the startup is very exciting, it could also be cumbersome the pockets because companies are demanding. Will startup funding become a speed breaker in front of your racing business idea?
Startup fundings for small businesses can be a slippery slope but not impossible to climb. Here are a few startup funding ideas to get the company standing on its feet and to make the owner a proud one.
Startup Funding: How to Get Money as a New Company?
Startup funding’s have three categories, namely, loans, business credit cards, and debt-free funding. Let’s take a deep look on all the options mentioned and available to entrepreneurs.
Loans essentially mean borrowing a sum of money that is to be returned with interest. This is the most traditional method of trying to acquire startup funding or any funding for that matter. There are multiple types of loans in the market, but most will require a minimum period of business history.
Banks will be reluctant to risk investing in a new and small business, but the hope is not lost.
What does a startup need as funding? It requires a short term loan for a small capital investment amount with low-interest rates for self-employed individuals. Microloans provide just that. They could be seen as a minor version of depending on a loan from a bank. Microloans are small amounts of money rendered to small and startup businesses at low-interest rates as short-term loans. This is ideal as a startup funding proposal as it benefits the company as well as the owner.
While this method of startup funding is not conventional, it is useful in use. Personal Loans function the same way as any other loan; they usually do not need collateral or security. It is ideal because a personal loan does not specify a method of using the money drawn. The borrower is free to use the amount of money loaned as per the financial need of the hour. Loan has to be in the name of business and not the individual.
The individual will be responsible liable to repay the amount and pay interest on the same. Hence, the loan application will be evaluated on the creditworthiness of the individual and will not inquire about the business at hand.
Family and Friends
If one can depend on the third party to fund a startup business, then why should not one depend upon family and friends for startup funding? In its true sense, this is a traditional money lending method but an effective one. This method asks one to take a loan from a family member, a friend, or a trusted one to help fund the new business. It is a non formal method of debt. Before enlisting for such a startup funding method, one must ensure that there is clarity regarding the terms of the agreement among both parties involved. Bring relations into business is often termed risky, but the world has seen multiple family businesses ruling the industry.
Business Credit Cards
How convenient would it be if your company had a credit card for itself? The business would be able to draw money as per the needs and without any hassle. A business credit card functions the same way as the credit card owned by individuals except with a spending limit. It looks as a bridge between a traditional loan and a credit card.
The lender will put a maximum drawing limit on the card, but the interest will be charged only on the money used, not the entire principal amount. This is a significant advantage for a small startup. The attention will be paid only on the amount being used, not the entirety of the loan amount. Along with this, the business credit cards bring a surplus advantage. It works as brilliant machinery to build business history as a startup. This will aid the business in future endeavors to become independent.
Having said the above, one must wonder if there is any possibility of starting a business without opening a debt? While embarking upon such a wonderful and joyous journey, need the beginning to be by asking for a financial obligation to someone? Is there not any startup funding that is not going to make the owner a person in debt? The answer to those questions is yes.
There are startup fundings that are debt-free. They ensure that the capital investment they need is meet and not cause debt in return.
The importance of savings has been highlighted through the economy with vigorous campaigning. Personal savings are the best way to ensure startup funding. It is investing in one’s own idea with assured returns. One is investing in their dream, which is equivalent to investing without the threat of fraud. It also answers the question, “If you will not invest in your idea, why should I?” It a hassle-free solution without debt bearing and interest money is also save.
Equity financing allows startup funding by selling company stocks to investors in exchange for capital. The investors receive ownership interests in the company. This is an adequate method of debt-free startup funding. Investors are always on the lookout for startup businesses to invest in that have tremendous potential for future growth. One needs to target investors relating to the field in question and be pitch the business plan to them. If there is potential in the idea, investors will be lining up to invest in the startup.
A startup business is like a growing child. It only needs correct guidance and support to blossom into a beautiful endeavor. Startup fundings can be challenging to place and often become hurdles in the race to success. To make obtaining it easy, enlist above are a few methods that will guide the startup to its destination. One only needs to keep the faith and chose the right track to a sailing victory. See you at the finish line!