You’ve got a brilliant idea, come up with a catchy name and are planning to start your business in your very own home. There is, however, one small detail holding you back and that’s the financing of your new enterprise. Millions of other small businesses find themselves in a similar situation and many turn to banks, credit card companies and other lines of credit to fund their start-up.
Finding the right kind of finance can be challenging, even in the most sympathetic economic climate. In this article we’ll look at the more unusual ways to finance your new business.
Use Your Own Savings.
You’re already thinking this isn’t very unusual, but surprisingly few new start-ups actually think of using their own savings or taking time to save money before venturing out on their own. As well as saving you from making interest payments it’s also a great way of showing prospective investors how serious you are about your idea. You’ll also be interested to know that certain startup costs can be written off when you file your first tax return. A company like Tax Return will be able to give you advice on the subject of write offs.
Crowdfunding is a new way of raising funding online. It’s becoming increasingly popular for startup businesses. Small amounts of money are raised from a large number of people such as friends, family, customers and other interested individuals. Social media and crowdfunding platforms are where it all takes place. There are a number of benefits to this approach. The first is that you can reach a much larger group of potential investors. It also provides a great way to market your campaign and thereby your business.
This is a group financing system and requires a number of like minded people to come together and lend money to each other. It’s been used for a number of years and is a method of funding commonly used by small business groups with common aims. Finding this type of finance is not easy and will require a certain amount of research. There are various P2P lending websites you can go to when you’re looking for a loan. The rates are better than you’d get from your local bank.
Apply for a Microloan.
These are offered by microlenders. These are non-profit organizations that operate very differently from banks. You will be required to provide less documentation, however, the interest rate you pay may be slightly higher. Amounts you can borrow range from $500 up to $35,000 and are aimed at the startup entrepreneur.
Depending on where you’re located, there may be government assistance schemes you can apply to. Government agencies often provide financing in the form of grants and subsidies, some of which you may qualify for. There will, however, be a lot of competition and you may be required to match any funds you’re given.
This is a small selection of the funding sources available for new businesses. If you’ve got a great idea and the skills to get your business started don’t be put off by a lack of funds. There are so many avenues you can explore and if none of them work for you there’s always the option of saving.