Funding Your Business
Funding is the difference between a business and going bankrupt. A good funded loan is one where the lender has a vested interest in your success, because if you don’t get a return he loses his investment, or his money if you fail to pay him back. Funding is an essential part of business. It is how the lender makes his money and with the way that most new businesses are set up there is often very little funding available from traditional banks and/or private investors. This can be a big problem for entrepreneurs.
The first thing to do when starting out is to find funding. If you don’t know where to look then start looking on the internet, there are many sources for private funding available. Most investors these days are investors that are sophisticated enough to understand how to invest in a startup, they are the ones that will usually provide seed funding and are thus able to sell some or all of their stake in the business to interested parties. Some angel investors even provide seed funding to companies if they believe they have the potential to turn a profit. Most professional financial advisory groups are also very knowledgeable about funding sources and can help a company find reliable sources of funding.
Another source of capital are wealthy individual investors, there are actually thousands of them that want to invest in your startup. These investors come from all walks of life & often they are willing to stretch a little to get a deal finalized. You need to develop a business plan to show these investors exactly what you have planned to do, and how you plan to execute it. Most investors are impressed by a well thought out business plan.
Small business start up loans are another option available to new ventures. There are a number of lenders willing to provide low interest small business start up loans to new businesses. They have a lot of requirements that must be met, but if you meet the minimal requirements you should be able to get a loan. Lenders will require business documents, business plans and financial information that are organized for easy reading. They will want to see a copy of your business plan before offering you a funding solution.
Private investors are another source of capital that is available for startups. These private investors typically purchase shares of a business at a set price and they will receive regular payments based on the value of their stake. Some of these funding sources are angel investors, meaning experienced entrepreneurs with lots of experience that are willing to sell their shares of the business to investors in return for regular payments. The downside of this method is that you must meet monthly sales goals during the first few years to prove that the business is viable. Other options are hard money loans from banks and credit unions or private equity.
As you can see there are a number of funding sources that are available for new businesses. It is important to look at all of your funding options before accepting any, depending on what you intend to use the money for. Always make sure that the deal you are getting is the best one for you as it will ultimately determine your success as a business. With the right capital you can create amazing success stories and take your company to the next level.