Small Business Loans and other Financing-
Starting a business is an exciting experience, but it’s also costly. You’ll need money to rent office space and buy equipment and supplies. You’ll also need to have money set aside for marketing so that you can help your business grow. If you are going to have employees, you will need money to pay them. You’ll also need to pay for all other expenses associated with opening a new business. Fortunately, there are several ways for you to get the cash you need.
1. Sell Your Assets
Starting a business might require you to make a few sacrifices. Look over everything you own, and decide which assets are worth selling to help finance your business. Consider selling a second car that you don’t absolutely need or time-shares that you hardly ever use. If you own more than one property, look into keeping your primary residence and selling the rest. You should also take inventory of items you have in your home that might be worth a significant amount of money, such as jewelry or antiques.
2. Apply for a Secured Loan
Bank loans are another option for getting money for your business. If you’ve never opened a business before, most banks will offer you a secured loan. You’ll have to decide what to use as collateral for it. In most cases, this can be your car or your house. Make sure you’re willing to risk losing whatever you’re using as collateral if you fall behind on your payments.
3. Impress an Angel Investor
An angel investor is someone who will help finance your business under certain conditions. They might want to be part of your company as a silent partner or a member of the board of directors. In order to convince an angel investor to help you, you’ll need to impress them with your business plan and your vision of where you want your company to go.
4. Use a Venture Capitalist
If you have a solid business plan and management in place, you might succeed in getting a venture capital firm to finance your business. This process isn’t quick or easy, but you’re guaranteed to have all the money you need if you are approved. Keep in mind that these firms usually insist on insuring their investment by taking part in the ownership (and possibly management) of your company. Often taking a controlling interest (i.e. 51+% ownership). The up side is you will get experienced management help, the downside is you will lose control and the majority of any eventual profits.
5. Borrow From Family
If you are having trouble raising the money you need on your own, you might want to consider asking your family for a loan. Make sure they’re aware of the risks involved, and write up a contract with terms that everyone involved agrees on. This helps protect you and your family members in case any disputes or disagreements occur. You’ll also need to be clear that they are loaning you money and not acting as joint owners, unless you want them to be directly involved with your company.
If you raise money by asking others for it in the form of a loan, you’ll need to work extra hard to make sure their investment pays off. You don’t want your credit ruined by defaulting on a bank loan, nor do you want bad blood between you and your family if you can’t pay them back as promised. Once you have the capital, focus on building your business as quickly as possible.
About the Author:
Abigail Baker is a freelance blogger who writes about ways to finance business ventures. If you are starting your own business, you can apply for a secured loan at www.netloans.co.uk.
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