Whatever business you want to launch, you need a startup capital to get your venture up and running. The amount of money you are willing to spend from your personal savings will determine the amount you will need to borrow or if you need to look elsewhere to raise the capital you need.
While some business owners are willing to use their personal savings, it is never a possibility for those who don’t have plenty of money lying around. If your savings is not enough or if you’re not willing to risk money from your personal account, there are other potential money sources.
Banks provide a loan to finance real estate, vehicles, and businesses. Some may require a collateral to secure the loan and the duration may vary depending on the type of financing required. Some may only offer loans in large amounts, so if you need to borrow a small amount look for banks lending to businesses with a more accommodating loan.
If you have or qualify for a credit card, you can use it to pay for your business’s startup cost. Keep in mind, however, that some cards come with big interest rates, especially for those balances that remain unpaid. Some may also offer large business credit, so it may not be the right option if you need a small amount.
If you can’t qualify for a regular business loan, Small Business Administration (SBA) loans are an alternative. It is a requirement, however, that your business meets the guidelines set by SBA. Many banks provide SBA loans and the government act as the guarantor. There are also special SBA loans available to reservists, active duty military, and veterans.
This type of financing means bringing in a stranger to gain partial ownership of your business. Many venture capital firms make direct investments in exchange for equity stakes. Some firms, however, tend to be choosy and only invest in established business. In this type of financing, you many not receive any profit until the investors have profited.
While it usually takes money to make money, find saving opportunities to avoid overspending. Determine necessary expenses from optional ones and don’t get carried away with spending money.