Keep in mind that when it comes to obtaining fund for your business, things are no longer what they once were. Even though only a couple of funding sources are mentioned below, there are plenty of options out there where you can get money to run or grow your venture.
That being said, it is no shocker that today’s entrepreneurs find it hard to fund their business or get a loan to buy a business without going public. This is because there is a huge competition for this pool of fund and investors are really careful when they decide where and how much they want to invest.
Options from each of the below sources are good to include in your business strategy. As you can see, there is no one-size-fits-all funding source. Some sources are useful and come handy when you are starting out in your business. Other sources can be used for the supplemental fund during business growth.
Funds From Friends And Family
If you don’t have your own financial resources, such as money from a savings account or credit cards, borrowing from friends and family makes sense. If possible, consider inviting your beloved ones to invest in your company, either as a creditor or through partnership.
In most cases, you will have to explain to them the risk involved as well as what to expect two or five years down the road. Unless they demand a huge chunk of your business portfolio, borrowing money this way is a sound decision when you have limited options.
Funding With Crowdfunding
If you have been living under the rocks for the past few decades, you may not have heard of crowdfunding. Otherwise, this type of fund source has proven to be a viable choice for cash-strapped small business owners and entrepreneurs alike.
Crowdfunding, in fact, is a reliable and approved fund source under the JOBS Act introduced in Jan 2018. Here, a pool of small investors invest their money with the intention of funding needy businesses and earn interest as the return of investment.
Crowdfunding is easy to qualify for when you are denied bank loans or other angel investors are unwilling to do business with you. Additionally, this is a 'no-strings-attached' funding opportunity in the sense, your lenders have no intention of participating in your business dealings as partners or owners.
Another one option to get funds can be loans, which is in a way good and safe. Loans can be taken at any time depending upon the credit score and the pending loans on your name. There are suitable loans available in the market from which one can select the most appropriate loan to buy a business.
Money From Banks And Credit Unions
If you are a business with good credit rating and low-risk financial portfolio, obtaining a loan from a bank, credit union or other financial institutions shouldn’t be hard. You may need a loan at some point where terms are clearly defined and repayment is convenient.
Your financial institution or bank may require you to be a customer and they will monitor your business progress along the way before offering the loan. The bank will also use collateral to guarantee the loan. However, with good credit score and business standing, you may be able to secure a loan that comes with a low-interest rate and negotiable terms.