So you have a great idea for a startup business and the only thing that is holding you back is your need for additional business funds. First off, start by being a wise investor yourself, by exposing you and your assets to as little risk as possible. Do not throw all your eggs into one basket, so to speak, once you decide to turn your business idea into a full fledge business venture.
Just a piece of unsolicited advice, start small, maybe as a home-based business at first. As much as possible, veer away from the notion of securing a business loan to avoid being burdened with interest expenses and other financing charges. Your initial goal is to prove the viability of your business, then evaluate other aspects that need room for improvement or expansion.
Once your startup business picks up, and shows signs of potential growth, then you will have made your startup business a venture worth investing on. That is the first thing that most most business fund providers look into when looking for a good investment product.
At that stage, it would be unwise to wait until you have raised additional funds for expanding your home business, into something that has more form and structure as a business enterprise . Your goal this time is not lose the momentum for business growth, even if you have to seek additional funding from outside investors or financing institutions.
Potential Sources of Funding for Growing Your Startup Business
When looking for outside investors, look for them first in your circle of family and friends. If there is anyone willing or interested, let them in as investors. Doing so will put less strain and money-pressure on you and your business. Agreements with love investors are after all less constricting, when it comes to repayment terms and conditions.
However, try not to destroy their faith in you, because it will do you more harm than good. Building a good reputation in handling business obligations, even with informally contracted love debts, is valuable; especially if you want to grow your business further.
Banks and Other Financing Institutions
Keep in mind that banks and other lenders often require a specific period in which you have already operated a business even with minimum success. Lenders also want to make sure that they will be investing on a venture that has great potential to pay, not only the principal but also the interests that come with financing. This is why business reputation is worth more than the dollars you earn or keep by not honoring your obligations and commitments.
If you are a member of a minority group, or a business woman or a veteran, checkout your eligibility for a microloan being extended by the government’s Small Business Administration (SBA). The SBA is actually a program that coordinates with non-profit, community-based lenders who are willing to grant loans ranging between $500 and $50,000 at a minimum interest rate and up to a maximum term of 6 years.
Still, in light of the easy terms by which microloans are granted, you have to apply for one as early as possible. There are many like you, also seeking to obtain funds for a startup business, which means it will take time before your application gets processed.
Business Capital Investors
Business capital investors are different from lending institutions because the funds they intend to infuse will be in the form of semi-fixed investment, such as having a share in the ownership of a company, usually as a stockholder or as a bondholder.
Although they have greater capacity in providing larger funds, they also want to make sure their investments will grow by taking part in the decision-making processes. In case they are not satisfied with how the business is being run, capital investors have the option to pull out their investment when deemed necessary.