How you can fund your business without relying on investors
October 25, 2018
Though investors can provide funding for your business, they come with strict rules. You have to report back to them and comply with their regulations every time you need their help. A business may not necessarily need too much money to run or even start.
You can fund your business using better options than relying on investors. Sometimes, you don’t need other sources to seek funds. Bootstrapping your company allows you to start your business at low costs. For instance, you can share office space with another business owner to reduce the rent of leasing an independent space.
Look for free marketing options from online sites for you to get customers fast and start running the business. The online world can make your business a success and help you earn income without relying on investors.
Do you have a good credit score? You can put some pounds on your credit cards to use for funding the business. Do not take out anything beyond 35% of your credit limit since you don’t want to hurt your credit score. Ensure that you use both business and personal credit cards to avoid taking more credit from one card only. You should use the cards as separate entities.
Consider getting quick loans when there is an emergency in the business. These can save you when you are in a bad financial situation. Some companies also provide payday loans to entrepreneurs. You should be a disciplined business person who can pay back such loans within the required duration. The loan can help you cover some of the short-term expenses such as paying contractors as you give your clients time to settle their invoices.
Though financial institutions that offer payday loans charge high-interest rates, you can get one that has reasonable terms. Be careful when selecting the source of such funds to avoid getting into a worse financial situation. Ensure that you pay it back within a few days or weeks. The advantage with these loans is that the lenders are not strict on credit scores.
Your friends and family can also chip in to help you raise funds for your business. The advantage of borrowing from people you know is that you can get good money to cover a long-term expense. You, however, have to pay them back regardless of your relationship with them. Alternatively, use part of your assets to finance your business.
Some homeowners choose to apply for a second mortgage to finance their business. Though this can work, you should be aware of the risks involved and be able to pay for both mortgages. You can release equity on a number of your current assets and then sell them. The strategy gives you quick cash to finance your business and eliminates the need of relying on investors or creditors.
Do some financial calculations before taking a loan. Choose an option that is practical and affordable for you to avoid defaulting on payments. It takes sound financial management for you to get the best out of the financial sources.