You’re thinking of starting a business. One of the very first questions you may be asking yourself “how am I going to get the finances for my business?” In this article, I will be referring to a few different processes that can help you find ways to finance your business.
Angel Investors
Angel Investors are either small groups of people or individual investors who invest in your business. Angel investors can be a beneficial way of financing your business because of the potential experience and expertise this type of investor may have. Finding an angel investor who has relatable experience is essential. They will likely require you to have a business plan with projections of where you see your business in three to five years. Angel investors will likely invest in your business if you also have an exit strategy. This strategy allows the investor to recover their investment and profits.
SBA Microloans
The SBA or the Small Business Administration gives small loans to businesses of about $50,000. Applying for an SBA microloan can be extremely helpful. Similar to angel investors, SBA microloans offer potential investors with relatable experience. The SBA microloans go through intermediaries that fund the loan. These intermediaries can provide assistance in managing the start of your business, and in some other cases, they will require you to complete a course in order to receive the loan from them.
Credit Cards
Credit cards are a common but useful way to finance your business. Taking out a credit card for your business can be risky because it is linked directly to your credit score but helps because it can increase your cash flow in your business. Credit cards can be used in many aspects of your business, and you can potentially receive discounts or bonuses based on the credit card that you are using. Credit card companies can also offer cash advances. When considering cash advances be weary of high-interest rates charges by the credit card company.
Friends and Family
If you are comfortable enough to reach out to your friends and family for the funds to invest in your business, this is a viable option for you. The downsides to this are that any investment made by friends or family could alter your relationship with that person. Now, with your friend’s money involved in your business, they may be more concerned with your business decisions. This could forge a business relationship that you may not have wanted to begin with. Friends and family can be a great option to finance your business. You will want to be careful you are not overstepping any boundaries with them that will diminish your initial relationship with them.
How To Finance A Business
