Lack of financial funding prevents many business ideas from seeing the light of day. This is one of the toughest challenges you have to overcome as an entrepreneur when starting a business. Most start ups require that you have some money with you to help the business get off the ground. However, you might not have enough cash to set the business in motion. This doesn’t mean that you should put your dreams on hold, because there are various ways you can raise the capital you need.
Go for a Small Business Administration (SBA) Loan
This loan can help you get on your feet, but it needs that you have been in the business cycle for 2 years before you can qualify. The business must be generating cash flow for your application to be considered. To get the best out of this loan, you need to work with a lender with broad SBA loan experience.
Sell Your Products, Or Services
Selling products or offering services as you plan your business can give you some money to start. You can use this cash for logistics, or buying inventory. As much as it is little, it can still help you buy some business items.
Borrow Cash from Friends and Family
Having someone close to you who has some cash to spare you get a potential source of capital. This offers you a substitute to conventional forms of financing, because you don’t have to sign an application form or pay interest. This alternative helps you avoid the intrigues of bank financing. However, you need to meet your end of the contract so that you don’t destroy relationships and family ties.
Apply for a Home Equity Loan
Your home equity refers to your home value less what you need to repay on your mortgage. You can use this equity to refinance an existing mortgage, and then invest the balance in your business. The advantage is that these loans come at lower interest rates than conventional commercial loans. The only risk is that you put your home ownership on line. If your business fails or you don’t repay the loan, you stand to lose your home.
Use Credit Cards
Credit cards represent the most readily available way to finance a start up. The advantage is that the minimum payment on the credit card is very low. This option is suitable if you don’t have a lot of funds coming in, or you don’t have a lot of expenses to pay off. However this is a short term financing mechanism.
Go for Auto Financing
A business car is essential for a startup business. However, when just starting out, you might not have the cash to pay for a new car. The good thing is that you can get a car for your business without using your available working capital. All you have to do is apply for an auto-financing loan that takes a short time to apply and approve.