Six Ways To Finance A Start-Up Business
Need financing? You can often go to the bank for this but they won’t offer instant loans. Nonetheless, there are also other options. In this list, you will find six options to find the money for your company.
9 Startup Funding Options – Business Loans + More
1. Private investors
Private investors (Informal investors) want to invest part of their equity in a starting company. In the business world, they are sometimes called business angels. They are often former entrepreneurs who, in addition to capital (money), also bring knowledge and expertise.
Keep in mind that many informal investors like to remain intensively involved in the business process even after the start.
You often convince a potential investor with a short pitch. So you have to prepare very well for such an exciting sales conversation. Read all about the questions that an investor will ask you.
2. Bank financing
Most entrepreneurs still allow themselves to be financed by the bank. To be eligible for this, in most cases you must first write a good business plan . In this plan you show that you have a promising idea in the current market.
3. Guarantee credit
Suppose you have been active as an entrepreneur for less than three years and you need a business loan (money). At the moment you cannot offer banks enough security when it comes to collateral. The bank, therefore, runs an additional risk.
Then the bank with which you have applied for financing can make use of a special government scheme: a guaranteed credit. The government then takes over part of the risk. Do you want to know more? This Rabo page offers you access to more information.
4. Family and acquaintances
Calling on starting capital with parents, friends and other acquaintances? Some entrepreneurs are a bit hesitant about this. But if you make clear agreements between themselves, your environment can certainly be a good step towards a successful start to your business.
Borrow from family and acquaintances without a fight. Preferably record agreements on, for example, specific repayment terms, amounts and interest payments in a legal contract. In addition, seek financial or legal advice on time.
5. Financial lease
It is not always easy for starting entrepreneurs to buy machines, equipment or means of transport. A financial lease is increasingly being used by starting entrepreneurs and self-employed people without employees. Moreover, the assets are just yours, and that again offers tax benefits.
Microfinancing can offer a solution if you have a limited financing requirement as an entrepreneur. This is also referred to as an SME loan. A duration of one to a maximum of ten years applies to this. Do you want to use the money to buy a shop or office space? In that case, the term is a maximum of 20 years and there is a mortgage loan available too
Financing a start-up business can be a challenge but with little research, you can find the right loan that will help your business from the ground up.