How to Fund a New Startup

Monday, June 13th, 2016

Coming up with a best ways to fund your new business is crucial to the future success of the business. Many people may have the best business idea but lack proper funding to start the business or even make sure it succeeds in the future. There are many ways to fund your startup but you have to carefully examine each bearing in mind the type of business you are starting and your goals for stating it. Some of the best ways to fund your new business are explained below;

 

Small Business Loan

Banks and micro lending institutions are a great place to go to find funds for a startup. They have many options available for small businesses that are starting up. Bank loans are one of the various ways available to fund a business, but one must weigh between the various advantages and disadvantages before they can decide to go for this type of funding. Some advantages are:

• Lower rates of interest-banks charge only a small percentage of interest compared to other forms of funding like credit cards.
• Various types of loans- banks advertise different kinds of loans therefore providing a range of loan facility to an entrepreneur.
• Convenient and accessible-the great relationship built by a customer with the bank over time allows the bank to be trustful and therefore it becomes the first place to get funding.

Banks also have their own disadvantages:

• Long application process-before loans are approved, the bank needs to verify your credentials and details, which may take a lot of time.
• A long list of pre-requisites-in order to be secure the bank has many conditions that need to be fulfilled before a loan is granted.

 

Crowd funding

This is a new way of funding where anyone can contribute to a business that they think has the potential to grow. You have to up details about your business and how much funds you need on various platforms that are found online. If anyone likes your idea they may pledge to  fund the business and you agree on the way forward.

 

Credit cards

These are among the best readily available ways of financing a startup which can be a quick way to get your business up and running. They offer the advantage of having a low minimum payment. The disadvantage of credit card is that in case of difficulties in paying the interest rates and costs on the cards can rise very quickly and therefore may be detrimental to the business owner.

 

Venture capitalists

These are professional investors who invest in startup that show great potential to grow and have a proven business model. They generally offer advice to the entrepreneur on whether the product is ready for the market or what they need to do the product to make it market ready. The disadvantage is they may require a substantial stake in the business and are more controlling.

Those are just some of the available sources of funding available, the best choice depends on your type of business.

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Filed under: Tips & Tricks
Tags: business loan, crowd funding, startup, startup fund, startup funding, venture, venture capitalists

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