It’s always a challenge to finance a business regardless of its size. You need to understand one thing, it’s not easy. After you have come up with an idea, the next frog to eat is gathering capital. Because let’s be real, you cannot kickstart a startup without funds. If you have tried to do online trading, as a trader online, nobody can understand that better than you.
Here is a list of compiled techniques that can help you secure funds for your business:
Table of Contents
a). Begin Bootstrapping
Lots of entrepreneurs use bootstrapping to finance their business with a reliable internet connection. It’s a way of scraping personal funds (savings accounts, home equity lines, or even credit cards). This is a great approach to raise funds. You can continue to bootstrap until your business comes profitable. You won’t have to drown yourself in extensive loans or make monthly payments. Once you run out of personal funds, then you can rely on some external sources of funding such as a business loan.
b). Get a Bank Loan
Why not apply for a bank loan? There are lots of banks that are willing to offer funds to small businesses. Why not look for the banks that are offering small business lending opportunities and apply for them?
c). Reach out to Friends and Family for Loans
Sometimes, this is your best bet. You might have friends or loved ones who are personally interested in your success. Such people are willing to offer loans, too. If someone like that tries to help you, take that help. However, to make sure the relationship doesn’t go bad, create an agreement, and mention when you are most likely to return that loan.
d). Consider a Microloan
A microloan ranges from $500 to $35,000. It’s not provided by a bank, rather a micro-lender or a non-profit organization. As the same implies, the loan is smaller in size. It requires less documentation and the underwriting criteria are flexible, too. There is a catch though; you will have to pay a higher interest rate. It is usually taken to cover the capital gap such as buying new equipment or to service a contract.
e). Use Your Credit Card
Although it is risky to use a credit card for business purchases, if you are not in debt or falling behind on your payments, this option can come in handy. Use the card responsibly though. Make sure you are paying the minimum amount each month to stay out of trouble.
f). Make the Most out of Your 401(K)
The funds accumulated in 401(K) over the years are tempting when you want to start a business and need funds. A great thing is that you can tap onto them without facing any penalty. Since you are using your retirement funds, you have been extremely careful. Otherwise, you will end up losing the money that’s meant for your future.
g). Think About Crowdfunding
Crowdfunding is a nice way of raising money at a relatively low cost. Your friends, family, and even strangers can help you pledge money. Crowdfunding sites such as Kickstarter.com have funded 1,000 projects till now. However, you must remember that it’s not a long-term source of funding. It will support one-off sides only.
h). Look for a Partner
If you have a business idea, find a partner with funds. Or look for a strategic partner. It’s just like getting venture capital. It is also sometimes royalty based i.e. the partner gets a portion from every sale proceed.
Partner financing is mostly provided by large companies or companies that show interest in your business. They have customers, a marketing team, and salespeople who can promote your product or service. However, this only works if your product or service is compatible with what they are offering. Having a partner with the right agreement can be a blessing because it can save you the trouble of time wastage and better business understanding.
i). Find Angel Investors
If you have a tech business, bootstrapping and crowdfunding may not be best for you. Because you need more funds. In that case, reach out to angel investors. They are professionals with an established business. They have a high net worth and they are looking forward to investing in promising business ideas. They are ready to invest $10,000 and even millions.
If that’s the kind of funds you need, then look for angel investors’ associations in your country. There are even sites that connect entrepreneurs with investors. Some angel investing groups also hold competitions to provide new entrepreneurs with opportunities to secure funds. Look for such opportunities in your local community.
j). Factoring Advances
In factoring, the service provider offers you the money billed out on the invoice. You must pay it back once your client has settled the bill. In this way, you don’t have to wait for the client to pay. With advances like these, you can close the gap between billed services and payments to contractors. Once the pay gap closes, you can accept more projects. The goal of such advances is to help business owners hire new workers and make the business grows. Plus, the cash inflow does not stop.
k). Equipment Financing
The lender considers the financial records of a business as well as the value of the equipment. The terms of the loan are based on how well this equipment fits into the business plan.
Final Words
Regardless of the type of business, you might use all these options at some stage even if you are investing in CFD stocks. Nevertheless, find a viable funding option that actually fulfills the need at hand.