One of the main
reasons why more people don’t start their own small businesses is financing. A
lot of people have some great ideas for businesses that would surely be
successful, but they don’t have the financial means to get anything off the
ground. If you have a great business idea, but don’t know if you can do it
without the right funding, don’t despair. There are actually many different
ways that people can get funding for their small businesses. Let’s take a look
at some of your options.
1. Use Your Home as Collateral – Even if you don’t have a lot in savings, you could still get financing if you have something to use as collateral, such as a home. If you use your home as loan security, chances are that a bank is going to give you a loan, and the interest rate may only be a bit more than a traditional home loan. The only problem is, if your business isn’t successful, you could end up losing your home.
2. Sell Stuff – If you are like most of us, you probably have tons of stuff lying around that you don’t use or need any longer, including electronic items such as old laptops, iPads, iPhones, etc. You can sell these things at website such as Sell iPhone. You earn top dollar, and someone else gets a great deal on your gear that has been refurbished for resale.
3. Try Vendor Financing – If you need new equipment, you may want to look into vendor financing. This is a way that you can get the equipment you need without actually having to take out a loan, because you finance it directly through the vendors that are selling the equipment you need. For instance, both IBM and Caterpillar offer in-house financing on their equipment. Finance charges vary.
4. Look into Debtor Financing – It can take weeks, and often months, to start getting cash owed to you from debtors. But, when there is money owing, there are financial institutions that will loan you money based on your receivables. You can get cash right now, as much as 80-85 percent of your receivables.
5. Learn about Angel Investors – There are many experienced business people who love to invest in new businesses, and are known as angel investors. Often, these angel investors are retired or semi-retired, but they don’t want to get away from the business world. They can help you not only with financing, but also with their skills and knowledge.
6. Consider Private Equity – Many investors are looking for the next great business idea to invest in, but it is not just venture capital investments that they are making. Private equity funding is becoming more and more popular, and serious investors are helping startups get off the ground. In fact, numbers are showing that there are more businesses started with private equity funds than with venture capital.
7. Go Online – A lot of small business owners are turning to online lenders to get the financing they need to get started. This is becoming increasingly popular, because it is so fast and easy. Normally, it takes about an hour to complete an application and be approved, and you could have your funds issued within just a few days. Former US Treasury Secretary Larry Summers said that he expects this type of financing to back more than 70 percent of small businesses in the near future.
8. Get the Public to Help – Many small business owners are trying crowdfunding sites such as Indiegogo and Kickstarter to get the funds they need. By doing this, they get numerous investors. Just remember, in most cases there are payment processing fees, and you may be required to raise all or nothing, and not be able to take a partial amount if all you need isn’t raised.