When starting a small business, financing is one of the main factors you need to consider. The acquisition of the capital you need to start your business and run it in its early stages can be a big challenge. Here are five ways to finance your small business.
1. Small Business Loans
A small business loan may provide a large sum of money for your business at a relatively low-interest rate. Even though you may end up borrowing more than you need, taking out a loan is one of the cheapest ways to fund your business.
If you choose to take out a loan, you should opt for a credit union or a community lender instead of a large national bank. The former have higher chances of obtaining approval.
2. Crowdfunding Platforms
These platforms offer entrepreneurs a direct way to solicit funds from the public. All you have to do is post your pitch on the platform. The readers will then contribute towards your fundraising goals.
However, most crowdfunding platforms, like Kickstarter and Indiegogo, charge steep transaction fees for their services. You may have to pay up to 10 percent of what you raise.
3. Advance Orders
If you already have clients lined up for your business, you can make money through presales or advance orders. Apart from making you the money you need to run your business, advance orders help validate your business idea.
4. Personal Savings and Assets
Using pre-existing money is the easiest way to finance your small business. You may use your assets as collateral to take out a personal loan or spend money from your emergency fund as capital; however, these actions can be costly if your business doesn’t succeed.
The government and other organizations sometimes offer grants to promising small businesses. Collaborating with a college or a university increases your chances of getting a grant for your business significantly.
Every business needs enough capital to get on its feet and cater for any eventualities that might arise before it stabilizes. As a small business owner, you can draw inspiration from renowned financial managers such as Brian Bonar. Brian Bonar has served in various managerial capacities over the years, and he is currently the Chairman of Daldada Financial Corporation Board of Directors.