On many occasions, entrepreneurs come up with very viable business ideas or strategies only to encounter an obstacle, financing the venture. For any business to start from scratch, there has to be a particular means of funding to keep the company not only up and going, but also on its feet. The amount of investment required varies from one business idea to another depending on some factors including what type of activity you intend to establish. Traditionally, most entrepreneurs depended on loans from banks for financing. Unfortunately, this trend is fast diminishing as most banks are denying their services to first-time entrepreneurs. Though the red-tape from the credit approval by banks always has been a hindrance, there are other means of how to get financing for a startup business.
Some of the most viable ones fall into two broad categories namely, internal financing and external funding.
How to get financing for a startup business from internal sources
As a budding entrepreneur, you would finance your startup from an external source like personal savings maybe from a previous employment or another already existing business. It is a debt free means of how to get financing for a startup business. It has less risks for the business especially due to debts.Friends and family – You would get direct financial support from close relations with family partners who would offer you soft loans to be paid at a later date. This method is advantageous in that the means of repayment are very flexible and negotiable.
You would have an asset that you can sell out to earn you some funds. Also, you would opt to rent out the property for continued. Such a method though would require you to be saving the generated funds over a period before investing it all in the business idea at a go.
Sometimes you enter into a partnership deal with another business associate by pooling up available resources. You would be the sole idea bearer then you partner(s) would be the financier. In such a scenario, all the partners would be required to adhere to the state-controlled partnership acts.
External financing sources for start-up businesses.
Sometimes you would come up with a wonderful business idea backed up with an excellent business proposal. Investors would then be attracted to the idea and would be willing to partner with you on certain share request. Mostly, an investor request for shares ranges from $20 to $25.
Many states do offer financial support to entrepreneurs through operated government grants. Most of this business ideas are research oriented or scientific based. Unfortunately, the government provides strict requirements or procedures to be adhered to by the participants. On doing so, people have sidelined or discouraged.
You would also opt to borrow from other financial institutions like research centers. It is another debt related means of getting financial support. This method though requires that the business idea is related to research under the institutions.