If you want to secure financing for your business, you need to know how much money you need. This entails the assessment of cash flow and other expenditures. Once you already know what amount is needed for your business, you can know start looking where to find the cash.Below are some tips on how you can secure financing for your business.
#1: Use a portion of your savings or salary.
If you’re on the start-up stage and you need that working capital fast, the best source you’ve got is your own pockets. Financing your business yourself means you don’t owe anyone anything. Money is about self-discipline and shoving a little away every paycheck means you can fund your own entrepreneurial dreams.
#2: Ask your friends and family to join you in a partnership.
Probably, they are the nearest source of funding next to you. You will still need to approach them in a professional manner, and bear in mind that being friends or family doesn’t mean a guaranteed yes. You can offer them a partnership and present them with a clear business plan to make that venture a success.
3: Talk to your bank.
If you have a good credit score, then you can apply for either a personal loan or a business loan. Bear in mind that when it comes to dealing with the banks you need to have all your ducks in a row. Prepare financial statements and have a business plan at the ready because they will want to see it. Analyze those interest rates carefully and make sure you have the ability to pay back the loan whether it is long or short term. Here is what you’re going to need to apply for a business loan.
4: Apply for Microloans.
Microloans are loans of a small amount and payable in a short period of time. To some extent, microloans can be very much like applying for a personal loan to banks. You will be required to present your credit statement, a simple business plan to prove the viability of your business, and collateral or personal guarantee. You can obtain a loan from $10,000 to $50,000 from the so-called “micro-lenders.” They are the non-profit organizations that serve as an intermediary between you and the Microloan Program.
5: Approach Venture Capitalists and Angel Investors.
Venture Capitalist or VCs are wealthy people that devote themselves to making money out of investing in businesses. They form the so-called VC firm, a financial institution that funds start-ups and small businesses with high-growth potential. Angel investors usually invest their money in entrepreneurs with strong determination to grow their business. Both VCs and angel investors are investing their money in exchange for higher returns and equity share in the company.