Have you always wanted to be an entrepreneur but you haven’t yet taken on that venture? There must be a reason why you have not followed your dream yet. For most aspiring entrepreneurs, it’s because of one thing. They lack the necessary capital to set up a business, and this makes them quit before they even try.
If you don’t want to fall under that category, review some popular ways to fund your startup during the first year:
How to Fund Your Startup for Maximum Growth
#1. The Bank
When people need money, the first thing they think of is a bank. Just because you are unsure, you should not shy away from borrowing money from banks. Increasingly more people are having a hard time securing money from banks but this is not a good reason to give up.
If you borrow from a bank and get rejected, try a credit union. Credit unions are community-oriented institutions that are nonprofit in nature. They are more likely to consider your loan application. What’s more, according to the owner of smallbusinessloans.co, you should consider exploring the credit union option first before approaching banks.
Although you will not find any federal government grants for startups, some states offer them to entrepreneurs who are venturing into certain businesses.
For instance, if you want to open an eco-friendly or non-profit business, you will have numerous grants at your disposal. Many other types of businesses qualify for grants as well.
#3. Private Lenders
If you can get a private lender to give you money, you will be better off – you will not feel guilty about accepting money from family members. Nowadays, there are so many private lenders in the market that you will be spoilt for choice.
However, you need to do your research before settling on a particular lender because not all of them are equal.
Does the lender you are considering have a good online reputation? You need to check their terms first. You do not want to end up with a private lender who is always asking for more money and changing the original terms of agreement.
The internet has given most people a chance they would not have otherwise. The growth of crowdfunding has made it possible for startups to get off the ground.
Sites such as Kickstarter and GoFundMe are the most popular crowdfunding platforms. Use their platform to reach out to your target audience and ask them to contribute towards your business’s growth.
Not only will you be getting the funds you need, but also a whole community that is already interested in your products and services. The community is far more valuable than the financing, as it makes it easier for you to create some buzz.
#5. Credit Cards
If you require money right now, the best thing would be to use a credit card. Your personal credit card balance will do the job but use it carefully.
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Make sure that you use credit cards as a short-term option only. If you take up too much credit, you will ruin your credit score and destroy your chances of qualifying for a personal or business loan in future.
However, do not borrow from other people’s credit cards because this might come back to bite you.
#6. Angel Investors
Angel investors are persons with surplus cash and an interest to invest in startups. They work in groups so that they are able to screen your proposals before making the investment. Aside from capital, an angel investor can also offer advice and mentorship.
Companies such as Google and Yahoo have benefited from angel investors. In exchange for capital, these investors usually expect up to 30 percent equity in your business. Angel investors prefer to take on more investment risks for the promise of higher returns.