Funding Opportunities For New Business Ventures

Tips-for-New-Business

Irrespective of the business structure, whether it is a single proprietorship, partnership or corporation, funding is the fundamental to running a business. Remember funding is not easy to come unless you have the potential to sell your business model to the financiers. Self-funding or boot-strapping is how starters procure their initial capital. This can be achieved through zero interest credit card loans or mortgaging your personal assets. The risk to invest your money displays the confidence in the business plan. This can give the confidence to potential investors to invest their money in your business. Seeking funds from friends and family has been in practice since time immemorial. Since people closest to you are aware of your potential, they will be willing to take the risk of investing in your venture. Though, at times of failure it can lead to heartburn.

Professional Funding Options

Venture Capital
Many start-ups consider venture capital as a risky funding proposition. This may be true because of the predatory business practices followed by them. Since venture capitalists are responsible for other people’s money, they do not wish to take the risk unless it is worth the deal. Not all startups are eligible for venture capital funding, only those that have the right product opportunity supported by the market and proven management stand a chance. But if this works out, startups have a chance of increasing their sales multifold within a short span of time. Multimedia communications, new growth industries, biotechnology are some of the areas that can be considered for venture capital opportunities.

Angels
Angels or private placement as it is called are a group of potential investors that look out for worthy business opportunities to invest their money. These Angels meet up often to discuss various business opportunities that come their way. Finding Angels that want to invest in your business could be simple; contact government agencies, business incubators, business development centers, to reach these Angels easily. In addition, these private investors are connected with investment communities in your locality.

Commercial Lenders
Commercial lenders are all over the place. You can find private lenders who may be interested to provide a small business loan for your project. Federal banking laws prevents investment in risky business ventures, as they do not want to risk the savings of depositors. Banks are also not allowed to lend to startup companies. Businesses that have solid collateral are eligible for a loan from the bank. Since startups do not have a concrete collateral, banks do not offer them business loans. Businesses that are in the field for a long time and have built assets that can act as collateral are often considered for loans by banks. Even if the business fails, their assets stand as a means for recovery.

The Small Business Administration (SBA)
SBA offers loans to startup companies. These loans are administered by local banks. The basic requirement for the loan is one-third of the capital from the owner. The balance needs to be guaranteed by a personal asset. You can obtain loans from certified SBA lenders within a span of one week.

Private lenders
Private lenders are all over the place, select a reputed lender who can offer loans at the best rate of interest.

Read also Enjoy The Rewards By Bootstrapping Your Business

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