How to get financing for your start-up
5 minutes read
Maybe you're still planning your business or you've just started it. Whatever the stage, you have high hopes for your company. You want it to grow.
As you know, success is far from guaranteed. Starting a business is risky. That’s why many financial institutions shy away from lending to start-up businesses.
Look at different sources of financing
But don't be discouraged! There are many potential sources of capital for your business. Here are some different financing sources.
- Personal investment—When starting a business, your first investor should be yourself with personal money and/or assets to secure a loan. Investors love to see that you are fully committed and ready to take a risk on yourself.
- Love money—This is money loaned or invested by family or friends.
- Grants—A grant is a sum of money conditionally given by government organizations. You don't have to repay it if you use it under the terms of the grant.
- Angels—Angels are generally wealthy individuals who invest directly in small firms. They typically make small investments and also offer their experience, network and knowledge to help you succeed.
- Venture Capital—Venture capitalists invest in the most promising start-ups in high-growth, technology-driven sectors. They take an ownership stake in companies to finance the high-risk early stages of development. They invest more than angels, typically more than $1 million and they expect a healthy return.
- Loans—It is not easy to obtain traditional bank loans for start-ups, but it is possible. To help, there are some government programs to guarantee business loans from financial institutions. There are also organizations that specialize in lending to new ventures. For example, if you're a young entrepreneur check out Futurpreneur.