Top 5 Ways to Finance a Startup or Small Business
Money is crucial to the success of any small business. Whether you are a one-person operation or have a few employees, there will be bills to pay, employee salaries, equipment and supplies to pay for and other expenses. These expenses can stifle the growth of your business and thus it makes sense to find financing early on. Here are five top ways of financing your small business:
If you are running a very lean startup, your personal savings can kick start the business and help it stay afloat. There are examples of successful businesses that have made it through with bootstrapping. If you are thinking of starting your own business, start saving for it.
Savings from Family
Your family members can help you fund your business. Some will do it out because of the familial ties they have while others may want to come in as investors expecting a return.
Angel investors are usually wealthy people who believe in your business and would like to help you make it successful by providing funds. An angel investor will expect profits and may want to have a say in the way your business is run.
Venture capitalists (VCs) commonly finance startups. Getting money from a VC can be a lengthy process and you need to have your business facts right. VCs usually consider your business plan, management team and your commitment to make the business a success before providing funds.
Merchant Advance Loans
Merchant cash advances can help your business when money is needed fast, perhaps to pay for a sudden expense. The merchants will usually not look at your credit score to finance you. Merchant loans are usually given to companies that have started seeing some positive cash flow.