How to find Startup Capital for Business?

By | March 5, 2020

Funding your newly formed business is one of the difficult things to do; especially when n number of options is available in the market it gets tough to choose the best one out of all of them. There are various options available which can be considered for raising funds.How to find Startup Capital for Business

Approach a bank

One can approach a bank for loan to begin or fund operations for the business. However while approaching a bank one must make sure to keep the business plan and other documents ready which is often asked by bank to check credibility of an individual. Owner shall also be asked to show his last year tax returns and bank statements; hence one should keep these documents handy.

Federal grant statement

Business owner can approach to the small business administration to have access to the list of grants available to industries. Such kind of grants is quite restrictive with regard to their use and availability. It is also not sure if you will get the grant or not, so an individual should not rely on it completely and should search for other options as well.

Equity financing

Herein, the business can rise funding by allotting certain percentage share of business to investor. The investors include venture capitalists, angel investors or institutional investors. One can even approach his home i.e. his savings for raising funds for the business. However before investing your home equity, be sure that the business would turn out successfully, otherwise one may end up losing at both the places i.e. home and business.

Insurance policy

One can borrow against the insurance policy if any or can even use the IRA funds which have been accumulated by the company since years.

Approach for loan to friends and family

One can even approach friends and family for money, however one should make sure to get everything in writing such that it does not spoils the relation or does not puts a negative impact on the business.

These options can thus be considered for getting funds for the business, but before the process is initiated the owner must make sure that he has an intact business plan in his mind with a defined set of goals and objectives. Also one has to convince the payer about low risk associated with the investment, as investor will genuinely not be interested in extending help when it amounts to risk of loss of such money. Hence it is important that all the information should be provided to the investor containing following details;

  • Keep the cash flow projections accurate.
  • Specify how the amount would be utilized and recovered back.
  • The business should maintain goodwill and credibility in the market and such factors should be discussed with the investor to make him feel contented.
The Bottom Line

Business owner can thus approach these sources to raise startup capital for the business, however they should also make sure that the debt is repaid in time as default in payments may affect their goodwill in the market, thus making situations tough for them to survive within the industry.

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