Statistics have shown that more than 500,000 businesses are started every month, only about two-thirds of startups will survive after two years , half will survive five years and only one-third will still exist after 10 years. Many times, these startups were products of beautiful, well thought-out ideas that were stiffened by paucity of funds. Even though startups have carved a niche for themselves in the economic setting, contributing a significant portion to the GDP, it is still hard to get funding through bank loans. In this situation, what business funding options are available?
venture capitalists are investors who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to funds. Venture capital is money that is given to help build new startups that have been studied and considered to have a high-grwth potential. These investors have deep pockets, often providing enough money to fund the startup with their eye on profiteering from the company’s growth. Their investment however comes with some conditions which includes; parting with a significant share of the company and generally advising entrepreneurs what to bring into the market. This may derail the original plan of the startup vision bearer. Venture capitalists can be somewhat impatient looking to recover their investment within a three- to five-year window.
Business Credit Cards
If your business is finding it hard to access business loans and the funds you are looking at don’t exceed $50,000; it is only wise that you join the legion of startup entrepreneurs who are using their credit cards to fund their businesses. To be on the safe side, it is important that you consider getting a small business credit card to keep personal and business financial transactions separate. This can be helpful in establishing a good credit history for your business especially for future circumstances.
“Nothing goes for nothing” hence,if you have a new business idea but no money to invest, and insufficient credit history to obtain a business loan, then you can enter into a partnership with someone who has money to invest. This way, you give up some shares in the startup and the equity financier becomes your business partner.
Credit unions bear a semblance with the commercial banks, they are local and small institutions that serve a local population. These credit unions are non-profit financial institutions issuing small business loans at competitive rates and more flexible than banks . It is best to apply to a credit union close to your area of residence or with whom you share some affiliation.
Currently, incubation centres have taken a central role in entrepreneurial growth. These centres are run experienced entrepreneurs who invest in your idea and provides guidance to facilitate your success. They can also connect you to potential investors, securing business funding.
When the banks shut their backs behind you and there are no family nor friends who have enough money to find your idea, there is still a glimmer of hope that should keep your startup from dying. Today, alternative sources of funding abound, even online and around you. Only get the work plan right and know the right place to search.