When it comes to obtaining financing for your business, you have alternatives beside setting up a lemonade stand.
Funding for the earliest stages of a business is called seed capital and usually comes from savings and credit cards.
However be sure to explore all of your alternatives before taking on too much personal debt.
1.
Mom and Dad: Who else believes in you and your idea wholeheartedly?Ask other relatives as well, especially those looking for a good financial investment.
As with any business dealings, be professional and provide a written agreement between you and a parent, sibling or relative-and keep your word.
2.
Banks and Credit Unions: Banks and other financial institutions offer small-business loans with varying terms and generally provide five types of small-business credit:lines of credit, term loans, leasing, real estate financing and credit cards.
When you approach a bank or credit union for a loan, be aware that you will need to have a solid business plan to convince them that you are a good credit risk.
3.
Angel Investors: Angel investors-individuals with money to spare and a taste for vicarious entrepreneurship-are another option when a business needs higher capital.
Good sources for locating them include banks, local chambers of commerce and local or business journals.
4.
Venture Capital Funding: Venture Capitalists invest through management funds or make direct capital investments in a growing business.
Venture Capitalists usually have specific performance requirements and can play an intimate role in developing and expanding your business, so make sure you partner with a Venture Capitalist that shares you vision and goal.
5.
Non-Bank Financing: Entrepreneurs also have a wide variety of non-bank financing options including commercial finance companies, credit unions, life insurance companies and credit card firms.
Other options include taking out a second mortgage on your home, partnering with a larger company, securing a community development loan and find other people who may be willing to make cash investments in your company in exchange for a share of ownership.
Funding for the earliest stages of a business is called seed capital and usually comes from savings and credit cards.
However be sure to explore all of your alternatives before taking on too much personal debt.
1.
Mom and Dad: Who else believes in you and your idea wholeheartedly?Ask other relatives as well, especially those looking for a good financial investment.
As with any business dealings, be professional and provide a written agreement between you and a parent, sibling or relative-and keep your word.
2.
Banks and Credit Unions: Banks and other financial institutions offer small-business loans with varying terms and generally provide five types of small-business credit:lines of credit, term loans, leasing, real estate financing and credit cards.
When you approach a bank or credit union for a loan, be aware that you will need to have a solid business plan to convince them that you are a good credit risk.
3.
Angel Investors: Angel investors-individuals with money to spare and a taste for vicarious entrepreneurship-are another option when a business needs higher capital.
Good sources for locating them include banks, local chambers of commerce and local or business journals.
4.
Venture Capital Funding: Venture Capitalists invest through management funds or make direct capital investments in a growing business.
Venture Capitalists usually have specific performance requirements and can play an intimate role in developing and expanding your business, so make sure you partner with a Venture Capitalist that shares you vision and goal.
5.
Non-Bank Financing: Entrepreneurs also have a wide variety of non-bank financing options including commercial finance companies, credit unions, life insurance companies and credit card firms.
Other options include taking out a second mortgage on your home, partnering with a larger company, securing a community development loan and find other people who may be willing to make cash investments in your company in exchange for a share of ownership.