Looking to start your own business? If so, you’ll need to acquire capital to fund your new venture. Regardless of the industry, all businesses need capital to survive. So, how can you raise capital for your small business?
Many banks and similar financial institutions offer small business loans specifically for entrepreneurs such as yourself. It’s a safe and effective way to acquire capital for a startup. However, the downside to bank-issued small business loans is the simple fact that you generally need credit, and good credit, to obtain them.
The advent of the Internet has paved the way to an innovative new way for entrepreneurs to raise capital: crowdfunding. Crowdfunding sites like KickStart and GoFundMe allow entrepreneurs to seek capital from a large pool of users (investors). Unlike traditional methods of raising capital, the entrepreneur typically does not have to forfeit equity of his or her business in exchange for investments. Instead, the entrepreneur may offer other perks, such as free products, special “premium” versions of the product, credit, etc.
Personal Credit Cards
Of course, you can always use your personal credit cards to fund your small business. Although easy and effective, it’s not exactly the best approach. Personal credit cards typically come with steep interest rates and hidden fees. So if you’re thinking about using them to fund your business, check the terms beforehand so you know exactly how much it will cost throughout the duration of the repayment.
Friends and Family
Another idea is to seek capital from friends and family. Being that they know you, they’ll likely feel more inclined to loan you money — even if you have a less-than-stellar credit history. And if a friend or family member needs enticing, offer to create a written contract that details the way in which you’ll pay him or her back. Seeing the terms in writing will boost confidence, making it easier to acquire investment capital.
Last but not least, angel investors offer yet another way for entrepreneurs to raise capital for their small business. Angles differ from independent investors in the sense that they offer both capital and expertise, usually in exchange for an equity share in the business. If you find the “right” angel, however, you’ll have an invaluable lifeline to help your business grow and succeed. After all, it’s in the angel’s best interest for you to succeed, so it only makes sense for them to help.