Starting a business requires planning, determination and finances. There are many ways you can fund your start-up business, and some are more reliable than others. If you have an excellent business idea that you want to start this year, do your research and take a hard look at your finances. In some cases, with a little bootstrapping, you might be able to afford to start a business on your own terms.
If you need a bit of financial help – here are some brilliant options to get your business off the ground and thriving.
Family and friends
It is common to seek the help of your family and friends when you need financial support for your new business. Family and friends may be able to loan you money for low-interest rates with flexible repayment options. Those over 55 are likely to use equity release for gifting purposes – and 1% of the gifts released help fund new businesses.
It’s a quick funding option that could end up being an excellent investment for them. However, be aware that mixing money and business with your personal relationships can cause problems. You need to assess the damage this loan could cause to your relationships and the possibility of business failure.
Loans
Bank loans are a traditional option for funding a small business and start-up. Do your research on the different type of loans available and the terms they come with. If you have a good relationship with one bank, you might be able to arrange a deal with them. Or, you could look into a bank with low-interest rates and a good loan scheme.
Short term loans, otherwise known as payday loans, can help to boost your cash flow and kick off a project. Beware of the sky-high interest rates on these loans.
On the other hand, Guaranteed loans are perfect for small businesses that don’t qualify for bank loans. You can use government schemes, like the Start-Up Loan, to apply for a personal loan between £500 and £25,000. They have a fixed interest rate of 6 per cent per annum, and it can be repaid over one to five years.
Crowdfunding
In recent years, crowdfunding has become a viable option for funding small businesses. You can display the total amount you need to support your business, and through various marketing strategies, you can raise the money. People can also lend you money or take shares in your company.
It would help if you were a marketing mastermind to raise a lot of money through crowdfunding. Typically, social media is the best tool to reach many people and reach your target goal. Crowdfunding works well for charitable causes and businesses with an ethical or environmental purpose.
Choose the right funding option for you and your business, and make sure to use your funding wisely.