Every year, billions of people launch new businesses. Although their business ideas may be different, they share the same objective. They all have to look for financial options that can help them cover their corporate options and start the ball rolling.
Funding options are based on the type of business, age, performance, staff members, and market opportunities, just to mention a few. Therefore, it’s important to tailor your approach and funding option. Here are some of the funding options you can consider.
1. Angel Investors
Equity investors, also known as Angel investors, are people with a lot of cash who offer capitals for entrepreneurs when starting out. Though, for you to qualify for the financial support, Angel investors will need to see the full potential of your business and may require to control your company or have a shared-ownership.
2. Venture Capitalists
These may be wealthy individuals, financial institutions, or government-sponsored sources with a lot of money to help businesses expand. They rarely offer financial assistance to small businesses, unless the entrepreneurs have the potential of growing.
Getting help from venture capitalists might be wise since you don’t have to repay it. Because of this, some banks may want to increase their credits.
3. Bootstrapping
When starting out, most entrepreneurs use what’s called bootstrapping. This is a funding option that can finance your business by putting together all the personal money you have. Personal funds may include your credit cards and savings accounts.
Using personal money rather than asking for a loan can be a good approach until your business becomes profitable. This is important since there would be no monthly payments and extensive loans, which can drag you down when snags come your way.
4. FHA Loans
These are government-backed loans, which incentivize entrepreneurs to buy homes on real estate platforms like movoto by offering lending options. However, the government does not offer loans – it just guarantees them. Since it takes risks, it would be easier for entrepreneurs to apply and qualify for FHA loans.
5. Factoring
This is another funding option where companies sell their receivables at a discounted-price to acquire upfront cash. It’s mostly used by entrepreneurs with bad credit or apparel manufacturers that have clients who slowly pay their invoices.
However, the only way you can consider factoring is when you’re dealing with government and commercial customers with a good credit card. When you use factoring properly, it can enable you to accommodate new customers and increase the cash flow in your business.
6. VA Loans
Qualifying for VA loans is among the advantages of working in the headquarters of the military. It also does not have down payment requirements to service members and veterans. Like the FHA loans, you must have lived in your house for one year and not less than that. Other advantages that VA loans come with include:
- Low closing costs
- The freedom of establishing a rental portfolio without a down payment
- Low-interest rates
7. Microloan
This is a type of loan that’s offered by SBA to small enterprises. SBA can provide funding support of up to $40,000, but it offers them indirectly. Instead, it works with intermediaries that make these loans available to investors. These intermediaries also offer management services to clients and may train you before granting a loan. This training program can help you to increase the probability of making your business grow.
8. Family and Friends Funding
Asking your family and friends for a financial boost may seem unusual, but tapping into this option is the first step, yet important before considering other external alternatives.
However, when you consider family and friends funding, you need to have a well-laid plan. With that, you may explain what your business is about and the possible returns.
9. Accion
This is one of the lending and microfinance networks. It provides startup capital and funds with some of the ongoing projects. For you to qualify for a financial boost, you have to prove that your company has existed for more than six months or a good credit history of repaying debts.
10. Credit Cards
They are effective to fund businesses by extending their cash flow. You may use credit cards to pay up manufacturers and earn certain protections or discounts. Credit cards can also be useful to alleviate financial problems and increase capital for your business investment.
To Wrap-up!
Finding the best way of financing your business investment can be challenging, especially when you have many overwhelming options. For this reason, detailing the outs and ins of every option can go beyond your searching scope.
In addition, discuss your lending options and strategies with experienced loan officers who have dealt with different investors before. This way, you will get a perfect funding arrangement that will benefit you and your lender.
