1431: 7 Realistic Ways to Get Financing for Your Small Business by Elise Forster with MoneyMiniBlog

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[00:00:36] [SPEAKER_00]: In this competitive era, you need to have an exceptional idea if you want to start your own business.

[00:00:42] [SPEAKER_00]: Establishing your business based on an out-of-the-box concept will enable you to target or capture more customers.

[00:00:48] [SPEAKER_00]: It's obvious that whenever you start your own business it will be a small-scale one, unless you have a million dollars in your bank account.

[00:00:55] [SPEAKER_00]: Once you are sure about what your business will be all about, the next concern will be regarding your business.

[00:00:59] [SPEAKER_00]: Starting financing it. In this post, I have shortlisted some of the ways in which you can get financing for your small-scale business.

[00:01:07] [SPEAKER_00]: 1. Self-finance your business.

[00:01:10] [SPEAKER_00]: There is no better way than financing your new business on your own.

[00:01:14] [SPEAKER_00]: For this, all you need to do is have a clear idea regarding all of the assets that are possessed by you.

[00:01:20] [SPEAKER_00]: The best way is to get an equity loan by mortgaging your home.

[00:01:24] [SPEAKER_00]: Many entrepreneurs have adopted this path of mortgaging or selling their possessions or property.

[00:01:28] [SPEAKER_00]: You will be able to receive a loan in lump-sum form from any of the banks that you will approach.

[00:01:34] [SPEAKER_00]: The best part about this is that the interest charged on these types of loans is pretty low.

[00:01:39] [SPEAKER_00]: You will also receive certain tax benefits on these loans.

[00:01:43] [SPEAKER_00]: 2. Taking assistance from family and friends.

[00:01:46] [SPEAKER_00]: Apart from self-financing your business, taking monetary help from family and friends is also a popular choice.

[00:01:53] [SPEAKER_00]: For this, you must be able to present the entire concept of your business to them.

[00:01:57] [SPEAKER_00]: You should convince them that the business will be a profitable one and their money will be utilized in the best possible way.

[00:02:04] [SPEAKER_00]: Your family and friends can be a reliable and flexible option for financing your business.

[00:02:09] [SPEAKER_00]: One thing that you need to avoid here, though, is putting pressure on them.

[00:02:13] [SPEAKER_00]: 3. Acquiring a loan from a bank.

[00:02:17] [SPEAKER_00]: This is one of the first sources of loans that will strike any entrepreneur's mind.

[00:02:21] [SPEAKER_00]: Banks are among the largest financial service providers.

[00:02:24] [SPEAKER_00]: It is one of the most traditional approaches for financing that every person follows for buying any asset.

[00:02:30] [SPEAKER_00]: In this process, you will have to visit a bank.

[00:02:33] [SPEAKER_00]: There will be a loan application form that needs to be completely filled out by you.

[00:02:37] [SPEAKER_00]: This form will ask you to fill out some basic information about the business

[00:02:41] [SPEAKER_00]: that will include the type of your business, products and services you'll be offering,

[00:02:46] [SPEAKER_00]: the legal structure, and much more.

[00:02:48] [SPEAKER_00]: However, in recent times, acquiring loans from banks

[00:02:51] [SPEAKER_00]: hasn't been as easy and straightforward as it used to be.

[00:02:55] [SPEAKER_00]: Seeing the increase in the number of defaulters, many banks have now adopted more stringent policies.

[00:03:01] [SPEAKER_00]: As a business owner, you may also end up taking a loan at a higher interest rate

[00:03:05] [SPEAKER_00]: when compared with other money lending options.

[00:03:08] [SPEAKER_00]: 4. Alternative sources.

[00:03:11] [SPEAKER_00]: In some cases, banks are not willing to finance small-scale businesses

[00:03:15] [SPEAKER_00]: due to the degree of risk involved with them.

[00:03:17] [SPEAKER_00]: Such a situation can sometimes prove to be beneficial for a business owner.

[00:03:22] [SPEAKER_00]: By taking loans from a private company, you will be able to enjoy the flexibility that they will impart you.

[00:03:28] [SPEAKER_00]: These companies are not dependent on other organizations and they make decisions on their own.

[00:03:32] [SPEAKER_00]: You can get a loan at the best interest rates.

[00:03:35] [SPEAKER_00]: There are no strict restrictions that are imposed on the loan that you receive from them.

[00:03:39] [SPEAKER_00]: The amount that you receive from these alternative sources

[00:03:42] [SPEAKER_00]: will not be as huge when compared with that of a bank.

[00:03:45] [SPEAKER_00]: However, depending on your requirements, you can choose any source that best suits you.

[00:03:51] [SPEAKER_00]: 5. Angel Investors

[00:03:53] [SPEAKER_00]: Angel investors will be of great help to you, especially in the initial stages of your small business.

[00:04:00] [SPEAKER_00]: They will demand a return of approximately 25% on the investment that they have made in your business.

[00:04:06] [SPEAKER_00]: Along with angel investors, venture capitalists also help in the growth of the new or the small business.

[00:04:12] [SPEAKER_00]: But these will need a confirmation from you that your business will generate revenue on a consistent basis.

[00:04:18] [SPEAKER_00]: They will also set a certain time duration for recovering the investment that they have made in the business.

[00:04:25] [SPEAKER_00]: 6. From Equity Investment

[00:04:27] [SPEAKER_00]: You can offer an investor ownership in your business in return for the investment made by him.

[00:04:33] [SPEAKER_00]: This is known as an equity investment.

[00:04:35] [SPEAKER_00]: In this, you will have to decide the share of ownership that you are willing to give and at what cost.

[00:04:40] [SPEAKER_00]: One aspect that needs to be taken care of is the percentage of ownership shares that you give.

[00:04:47] [SPEAKER_00]: There should not be a situation where you lose your control over the company.

[00:04:51] [SPEAKER_00]: In equity investment, you can get money from any individual or company into the business.

[00:04:56] [SPEAKER_00]: Money in the form of personal savings from business partners, stockholders, friends and relatives is included in equity investment.

[00:05:04] [SPEAKER_00]: 7. Crowdfunding

[00:05:07] [SPEAKER_00]: Crowdfunding has gained widespread popularity recently.

[00:05:10] [SPEAKER_00]: It is based on web projects that provide an opportunity to individuals for showcasing their project or business idea.

[00:05:17] [SPEAKER_00]: Through the web, these individuals can reach a large number of potential investors.

[00:05:22] [SPEAKER_00]: There are many platforms of crowdfunding that are available nowadays.

[00:05:25] [SPEAKER_00]: Before jumping into these platforms, you need to have a proper strategy and plan.

[00:05:30] [SPEAKER_00]: This way, you will be able to approach the investors in the best possible way.

[00:05:34] [SPEAKER_00]: One amazing thing about crowdfunding is that all the money you earn is entirely yours.

[00:05:40] [SPEAKER_00]: There is no need to pay the money back to any person or organization.

[00:05:45] [SPEAKER_00]: Final words.

[00:05:46] [SPEAKER_00]: Before finalizing any source for funding your small business, it is important that you explore each of them.

[00:05:52] [SPEAKER_00]: The best way to go about it would be to choose a combination of the funding sources.

[00:05:57] [SPEAKER_00]: Considering all the available options becomes important as it reduces the chances of making a wrong choice,

[00:06:02] [SPEAKER_00]: you can even consult a financial advisor if you feel that you won't be able to make a right choice for your business.

[00:06:13] [SPEAKER_00]: You just listened to the post titled 7 Realistic Ways to Get Financing for Your Small Business

[00:06:18] [SPEAKER_00]: by Elise Forster with MoneyMiniBlog.com

[00:06:21] [SPEAKER_00]: This show is sponsored by BetterHelp.

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[00:07:23] [SPEAKER_00]: And I want to thank Elise for the post as well as Kailin Bruce,

[00:07:27] [SPEAKER_00]: who is the creator of Money Mini Blog where this blog post was initially published.

[00:07:32] [SPEAKER_00]: Kailin and his wife had $24,000 of debt and they wanted to get out from under it,

[00:07:37] [SPEAKER_00]: so Kailin became a student of finances.

[00:07:39] [SPEAKER_00]: Today they are debt free and building wealth

[00:07:42] [SPEAKER_00]: and he shares what he has learned over the years with you on moneyminiblog.com.

[00:07:47] [SPEAKER_00]: And the writer of today's post, the one you just heard, is a guest author on that site.

[00:07:51] [SPEAKER_00]: Elise has worked as a financial advisor and speaker helping others achieve their goals.

[00:07:57] [SPEAKER_00]: So come by moneyminiblog.com to learn a lot more.

[00:08:01] [SPEAKER_00]: And that will do it for today.

[00:08:03] [SPEAKER_00]: I thank you so much for subscribing, for listening each and every day,

[00:08:06] [SPEAKER_00]: and I'll be back with you tomorrow.

[00:08:08] [SPEAKER_00]: So I'll see you there where your optimal life awaits.