That fantastic idea for a new business operation deserves to become reality. The main thing that prevents you from making it happen is money. You need start-up capital to get things going. How will you go about getting the funds necessary to launch the business and keep it running as it moves toward profitability? There’s more than one way to find the funding that you need. Here are some suggestions to keep in mind.
Since your business is still in the idea stage, there’s no business credit score to check. How about taking a look at your personal credit score? If it’s good to excellent and you have a steady flow of income that you plan on maintaining while the business grows, you could qualify for a personal loan. Once the business has sufficient cash flow, make the loan payments out of the business account. If you need help finding lenders who offer personal loans, a resource like Smarter Loans will help.
Are you willing to accept funding in exchange for the promise of future benefits? Angel investors are often looking for a viable start-up operation that will yield returns in a reasonable amount of time. Be mindful of how much input the investors have in the day to day operation. Ideally, they would function more like silent partners but still be there if you wanted feedback or wanted to get ideas about how to create a process for a specific business function.
Small Business Loans
There are lenders who specialize in providing funding for entrepreneurs. That funding may be in the form of one of several types of small business loans. With this approach, you need a solid business plan that outlines what the business will provide, how you will seek out customers, the order fulfillment procedure, and other key elements of the operation. If the lender believes you have the experience, knowledge, and ability to achieve the business goals, there’s a good chance of being approved.
Personal Line of Credit
Another approach to consider is seeking a personal line of credit. This could be in the form of a home equity line of credit. The nice thing about this approach is that you can use it to launch the business, pay off the amount used, and once again have the full credit line at your command. Compare what your bank will offer to the credit lines extended by other financial institutions. Using a resource like Smarter Loans will help you identify lenders who offer this type of financing.
Bridge loans are short-term financing options that help you get money now while you seek some type of longer-term arrangement. While they're more commonly used by established businesses, there are lenders who will offer this type of solution to entrepreneurs. This is especially true when you have a proven track record in the business world. Make sure you have resources on hand to pay off the loan even if it takes a little longer to lock in another source of financing.
These are only a few of the financing options that are available to you. Spend some time researching other kinds of business loans and various approaches to establishing credit lines. Weigh the pros and cons of each strategy, including how each one would impact the business. With the right lending partner, you’ll have the funding needed to launch and maintain the business until it can become self-supporting.