How to get finance to start a small business is the first question every entrepreneur should have. This question is easily answered in this article. So, read this article carefully and start funding your startup.
Financing your small business is the very essential task for every entrepreneurs. According to research the common business finance for any startup will come from personal resources, such as bank saving and borrow money from parents.
Before launching your startup you have to decide which type of funding you required for your business. Is it short term needs or long term capital needs for your future growth. If you are going to start a business with one time big investment then, you have to arrange short term needs for your business.
First, Reduce small business finance budget by
1. Cutting all unnecessary expenses.
2. Borrowing some money from few friends.
3. Leasing at low cost.
4. Partnering to acquire resources.
5. Hiring as few employees as possible.
6. Leasing business machines or equipment’s.
7. Being creative.
As we all know that the first thing we have to try for funding your business finance from friends, family and others who have trust on your ideas and entrepreneurship.
What are the other sources for financing your small business?
There are four sources that you can consider for financing your business for your startup. These sources are…
1. Banks.
2. Finance Companies.
3. Investment companies.
4. Government grants.
These are four major small business finance option for getting initial money for your startup.
What about Equity financing?
This is the common method for opening your business by sharing your company shares and ownership with many people. Equity funding is categorized in risk capital. So, think twice about your business plan and its successful working model.
What are the sources of Equity financing?
There are main six sources for obtaining equity finance.
1. Personal Savings.
2. Family and Friends.
3. Private Investors.
4. Partners.
5. Venture capitalists.
6. State sponsored venture capital funds.
These sources are considered as an equity finance and you must need to plan for money management and on which way you are using your funds in your business.
You can find an angel for getting money for your startup. Angel may be a private company, non professional investor, relative or any business associate who wants to invest those money in your startup. You need to to provide percentage of ownership or percentage of profit of each year.
What about Debt Financing?
This is the most affordable way for obtaining small business finance respect to equity capital. The important thing you need to consider is the how you are going to repay the loan. You have to make sure that your business will get some amount of regular cash flow to payback your interests.
Well, what are the sources of debt financing?
1. Banks.
2. Trade Credits.
3. Minority enterprise development programs.
4. Commercial finance companies.
5. SBA loans.
6. Small business investment companies.
These are six major ways to obtain money for your business capital. To get business loan, you need to write an effective business plan with proper working business model. If you have an established business then, you can easily get fund against your business property and previous history.
If you have any questions on how to get finance to start a small business then, you can leave your questions in comment box. Also, do not forget to share this article with your friends and family member who are looking for small business funding.
