Startups are popping up all over the place these days. Everyday another disgruntled worker seems to chuck the deuces to their boss and head out on the sea of entrepreneurship. However, the biggest issue with starting a new business 9 times out of 10 is finding the FUNDS to get if off of the ground. Things such as development, promotion, inventory, and other assets can quickly run up credit cards throwing you into a mountain of debt-and with little to no profits this can (and often does) spell disaster for aspiring business owners.
In a world where traditional bank loans are tough to secure and not as accessible as they were 20 years ago, entrepreneurs are now forced to consider alternative options for funding their startups.
A few non-bank approaches to lending can include:
Before venturing out into the unpredictable waters of entrepreneurship one should create a feasible business plan that contains finance details, expected approval dates, and all business requirements broken down by expense type. This way you’re able to establish feasible goals and hard (and soft) deadlines to work against for your launch.
- Crowd Funding– Kickstarter and Indiegogo are the top platforms for startups gathering funds for their official release. With thousands of startups created and many working full-steam nowadays, these platforms proved that the world cares for new ideas.
- Angel Investors – Try to pair up with a startup accelerator and look for potential angel investors who likes your idea. Search online for investors who may be interested in your niche check out the terms, people are always looking for ways to increase their portfolios, your business could be it!
- Family & Friends – Sometimes people overlook family and friends as investors, but this should be one of the first places you begin your search. Ask around to see who’s been waiting to make some money from their 401k or pension that’s just sitting in the bank, waiting to be invested. Be sure to approach them as you wold any lender….i.e. business plan.
- Credit Line– If you have a stable work history and a good track record of paying off debt, you may be able to qualify for a sufficient credit line. Before you do check out your credit score on sites like Experian or FreeCreditReport to take note of your documented history, and be sure to dispute any records that are inaccurate. Also, if you’re a homeowner, ask your mortgage lender about their terms for home equity loans and if you may qualify.
- Traditional Business Loans – Regardless of the country you live in, there are many types of business loans that may apply for your startup. Visit your local bank and ask about what business loans they have available. You may be surprised at what thy offer!
Having a solid credit history and some funds available already will definitely assist you in qualifying for any type of funding. Also, be sure to review your final business plan thoroughly before approaching lenders. Clearly illustrate how your business will have the revenue needed to pay back the loan and when lenders can expect payment-which is their main concern…the bottom line.