Financing For Small Business Or New Set-up Know The Options
Next to Impossible! You will think that way while searching the high and low to find
a reliable source that will support your small business funding needs. If you want to take a big entrepreneurial leap, you need to secure a source of cash. The need for finance does not end with start-up capital support but you will feel the same need in times of expansion of your business. This article discusses some options of small start-up financing.
Bank Loans
Banks are not very willing to provide business loans to new companies they often require 3 years trading. However, if you have a good personal credit score and agree to provide a personal guarantee, you may experience a different picture. Unfortunately, those who have just taken the entrepreneurial plunge rarely show a good credit status. This explains why most of the new companies are on the lookout for alternative sources of funding.
Small Business Grants
There are some government grants available for specific projects. The sum is never 100% and often requires matched funding. It is definitely a good support if you can find a relevant grant..
Angel Investors
This concept is becoming more common. Angel investors are high net worth individuals who seek good small business opportunities and provide them with monetary support in exchange for shares. The specialty about the angel investors is they may also play the role of mentors for the new entrepreneurs. These investors provide guidance to the new business owners. Not only that, guidance is also available for those troubled with their fledgling business.
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Crowd funding is getting popular as a means to small business financing. This way, money is raised from a cohesive network which everyone like a friend, family member, colleague and even stranger can be a part of. Money collection is done via social networking sites.
Venture Capital is available for larger startups and is much more demanding. It is less common and only a few are aware of how it works. Venture capital is rarely a suitable option for the start-ups. It works best for the established ventures. This option has a lot of strict regulations to abide by and these have made the choice less attractive. However, you can try this out if your company can show good performance in the past and a promising future.
It is very crucial to choose the right fund-raising option for your business purpose. Educate yourself on the different options and assess your business objectives. Pre-planning coupled with a good knowledge of the market will help you get what suits your case.