Starting a new business is an exciting, yet exhausting experience. It takes time, patience and money to get a new business up and running. While your dedication to your startup is clear, you need to figure out the financial end of things to start building your business. The following are the top three business startup financing options.
Startup loans are typically the first financing option new business owners will turn to. While this is a great way to get the money you need, it is not as easy as one would think. Lenders often avoid providing startup loans as new businesses are viewed as high risk. Regardless to how great your business plan is there is still a chance your business will fail and the loan will not be repaid.
When applying for a startup loan you must has a carefully detailed business plan in place. The lender is going to look at your personal credit since your business has yet to develop its own. To get a step ahead of the lender it is advised to pull your credit report to be fully aware of what is on it and make any disputes on errors. You may also need to show your personal savings and place personal collateral up to secure the loan
Crowdfunding is another excellent way to get the startup capital you need. Be reaching out to the public you could raise a portion, if not all, of your startup costs. Using various internet crowd funding sources you can raise this money from various contributors that believe in what you are doing, these are strangers, friends and family. This alternative funding source has helped thousands of new businesses generate the startup capital they need to become operational.
Personal savings and retirement savings are a huge way to get the startup capital you need. Of all people you believe in your business the most, so why not invest what you have saved for your future into your dream business. The biggest downside to using your personal savings and retirement savings is that if your business does not succeed you will have to start from scratch to ensure your retirement future. If things do work out as planned you could retire early!
Chris Fuller went to the University of South Florida and has worked in the financial sector for over 20 years. He has extensive experience in all aspects of personal and small business lending, from personal loans, equipment finance to cash flow based solutions for small mom and pop businesses, and large corporations.