There is a lot that goes into starting a small business, with the financial side of doing so requiring plenty of attention.
In a perfect scenario, you’d have all the money you need to start and grow your business from the ground up. But, even if this isn’t the case, there are still things you can do to get up and running.
Here are several ways to secure financing to start a small business:
• Friends and family: A common source of financing among entrepreneurs, this is one of the most efficient ways to secure funding. The primary benefit is the ability to borrow money without the requirement to complete mounds of paperwork. Even better, a loved one may offer you an interest free loan.
• Credit cards: If you already have a personal credit card, consider using it to fund the startup of your small business. This is a particularly good idea if you have a competitive interest rate. The only thing that may stop you is a low credit limit.
• Personal loan: Do you have good or excellent credit? If you can combine this with a regular source of income, even if your spouse earns the money, you’re likely to qualify for a personal loan. These loans are unsecured, have a competitive interest rate, and can be repaid over a period of 12 to 84 months (for most lenders).
While these are among the most common ways to secure financing to start a small business, there are others to consider. Also, keep in mind that you may need to combine two or more methods to get all the money you need.
For example, if you require $20,000 to start your business, you could ask friends and family for $10k and use your credit cards to fund the rest.
If you’re borrowing money to start a small business, look for ways to cut costs. This will make it easier to secure the funds you need, without overextending yourself.
Do you have experience starting a business? Did you borrow money? Where did you turn for funding?