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12 Easy Ways You Can Fund Your Own Small Business

One of the fulfilling and life-changing career you can achieve is having your own business. Your own business gains independence in your career. For many, it is a dream yet to be fulfilled, while others who are already starting, it is quite a struggle. Most businesses do not start immediately big as some entrepreneurs with very limited funding usually starts from scratch.

At times, start-up businesses who do not have enough capital to rent a space are initially put up in their own houses or even in their garage. Along with your invested capital, determination, perseverance, and hard-work must also be infused. It may seem hard at first, but once your business got its market share, the rest will be a sweet story of your success.

In starting a business, it’s fundamental that you need a capital to invest in resources needed. The question now here is, where will you get capital for the business? Are your savings enough? Or are you thinking of getting a loan from financial institutions or from a legal money lender?

To answer this, we’ll give you twelve ways on how you can fund your own business that will help you kick-start your journey towards being a successful entrepreneur.

  1. Self-funding “Own pocket” – The easiest way to put up your own business is to fund it out of your own savings. The fastest way to start your business right away as you need not depend on loan approvals before you can start. Cash flow will also result in better figures as this will keep you from paying monthly interests on loans. Some entrepreneurs don’t want to take risks in paying monthly loan amortization while the business is yet to bloom.
  1. Tap to your family and friends – If you don’t have enough savings, you can pool funds from your family and friends. This may be in the form of equity involving them as business owners. The sad thing is if the business fails and you couldn’t give back profits or even the capital, it might tarnish your personal relationship with them. Before entering into such agreement, make sure that you thoroughly discussed the consequences and risks they must bear.

For a safer position, you can ask financial assistance with them under fixed payment terms without involving them as part-owners. The good thing here is you can haggle or even waive the interest rates depending on how close your relationship is with them.

  1. Bootstrapping – By bootstrapping, you will infuse little start-up capital in the business, and let it grow by itself using the internally generated funds. Through this process, the initial earnings are plowed back into the business to grow its assets and equities. This type of funding does not rely on lenders to grow the business.
  1. Partnerships – This is a set-up wherein two entrepreneurs will put up a business where they will both infuse assets and equity, and thus profits and losses will also be shared.

A business partner could be a capitalist who will take charge of the capitalization while you handle the whole operations. Profits and losses are specifically arranged in this set-up. A general partner will share with you equally all financial and legal accountability in the business.

Choosing a right partner should be done meticulously. You should both have the same business direction. Trust and confidentiality must also be established.

  1. Lending companies – Many organizations are interested in lending to small businesses. There are legal lending companies out there who can help you grow your business by providing you with a loan. All you must do is go through their loan application process and get approved just like in banks. The best part of these online money lenders is that they offer more flexibility and fast approval.
  1. Personal loans – These are available in various lending companies and financial institutions. You may be granted a fast cash loan if you have a good credit standing, established creditworthiness, and with repayment capacity. In this kind of loan, you need not worry about a collateral, your credit scoring will take care of everything.
  1. Business loans – Also granted by financial institutions for business purposes. This usually requires a collateral and may take time to process. Unlike personal loans where the individual’s repayment capacity is considered, business loans are given to already existing businesses where that business can repay the loan through its operations.
  1. Crowdfunding – is a process of collectively raising funds through various people in the big or small amount of money. Collected funds are consolidated until it reaches the required capital to start the business.

The main platform of being crowdfunding backers  is through an internet website. The entrepreneur will set-up a site that can be accessed by a wide audience for bigger chances of collecting funds.

  1. Venture Capital – Like partnerships but on a larger scale. It is obtaining various investors through selling a large ownership of the business to different investors. Unlike other business partnerships, venture capital focuses on starting or evolving businesses who need a substantial equity.
  1. Angel Investor – also known as private investors, seed investors, or informal investors. These are often rich family and friends who are willing to put up a capital in your business. They compensate the help offered by acquiring partial ownership of the business or a convertible debt.
  1. Lease Equipment – If you lack a capital to purchase a machinery for your business, worry no more! Various leasing and finance companies now offer leasing options for business purposes. You must submit a quotation for the equipment you need, and they will purchase it for you under lease agreements.

Two types of leasing are a capital and operating lease. In capital leasing, the machinery is leased for a given period and you’ll have full ownership of it after the contract. In operating lease, you will return the equipment to the lessor once the lease term expired.

  1. Grants – Also called donations, these are capital given that does not need to be repaid. Grants are applicable to some businesses such as schools and hospitals run by non-profit organizations or religious sectors. Any business that gives livelihood to poor people or community can accept grants or donations.