Post by guest blogger JJ from Loan Base
Some people are able to start their own business whenever they feel like doing so mainly because they already have more than enough cash on hand to finance their endeavor. However, you may not have it as easy as them and thus have run into the challenge of acquiring the necessary funds to build your own business. The bad news is that most traditional sources of loans and investments might not lend you the money you need to turn your dreams of becoming a self-made entrepreneur into reality. But the good news is that there are other ways that you can consider in planning to get a loan for your business startup, three of which are as follows:
1. Business credit card
It may be your first time in your entire life to avail yourself with a credit card. You may have even only decided to jump right into it for the sake of financing your business startup, especially if you don’t normally use a credit card when shopping for things. If you’re still hesitant to get yourself a business credit card, it would help you to know that more than 65% of small business owners use one frequently.
- A business credit card is easy to apply for as compared to a traditional term loan, you don’t have to wait for several weeks or even months for it to get funded.
- You can qualify for a business credit card even when it’s only been months since you first built your own business startup unlike in a traditional term loan where one of the minimum qualifications for availing it is that you should have spent more than one year in business.
- You should make sure though that you have a good personal credit history before applying for a business credit card given that your business startup isn’t that established yet.
- In case you’ll be bringing in a few other people to help you run your business startup, your agreement with the issuer of your business credit card should state that any new partners you’ll be having should also be held responsible for any debts that your startup has already incurred.
2. Borrowing money from your family and friends
While it may initially sound awkward to you, especially if you’re really keen on playing the role of a self-made entrepreneur who shouldn’t have to rely too much on other people, it wouldn’t hurt to reach out to your family and friends and ask them if they can lend you money to fund the business startup that you’re building.
● Your family and friends may even give you more than the amount of money that you want to borrow from them if they strongly support your business endeavor.
● You should be careful though not to let asking money from family and friends become the cause for your respective relationships with them to turn sour.
● The key is to be as transparent and honest as possible when discussing your business startup and plans to borrow money from your family and friends so that you can fund it.
● You have to make sure that the loan agreement made between you and your family or friends has been set in writing to make it legally binding instead of doing it verbally.
To very simply put it, crowdfunding refers to a relatively recent method of gathering the money for your business startup wherein you’ll put your business plans out in the open wilderness that is the Internet and let other people – most of them you may not even know personally at all – drop whatever spare amount of money they may have towards your venture.
● Two of the most popular platforms that people who want to build their own small business startups have used for crowdfunding are Kickstarter and Indiegogo. However, you’re also free to use crowdfunding platforms other than those two.
● You should remember though to make your funding goals easy to achieve even if not many people decide to hand you their hard-earned money for a business that isn’t guaranteed yet to become successful.
● In case you’ve met or even exceeded your funding goals, you should give those who donated a portion of their savings to your business startup a token of appreciation or some other display of gratitude on your end.
Raising enough cash as capital for a business that you want to build from the ground up may be the ideal way of financing it. It can take years for you though to come up with enough funds to launch your own business using that method alone. So you’ve decided to approach your local bank, a lending firm, or some investment company and try borrowing money from them. However, they may not easily warm up to someone like you who’s completely new to the game and thus not lend you any money at all. The above might be tricky to learn at first glance, but there are always people experienced in the field that could give you a helping hand. Folks here can give you a rundown on things to do should you do plan on getting a startup loan.
JJ is a highly qualified mortgage broker with years of experience in the finance world. He is CEO of Loan Base, and has a keen interest in economics and finance. JJ has a breadth of knowledge on a number of topics, ranging from the intricacies of lending in various countries, to trends in housing and commercial property markets on a global scale.