5 Ways to get Funds to Start a Small Business

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Having an idea for a business they say is the beginning of actually starting a business but often you will need to find the funds required to make that idea a reality.

For many, this is where they come across their first stumbling block. Despite this, there are options available that can help you to find the funds you need to get your business up off the ground and moving in the right direction.

Here are a few ways to get funds to start a small business:

1. Self-Funding

There is a possibility that you might have the finances for your business sitting in your personal bank account. While this might seem like the easiest option, if your business fails then you would have lost all of your hard-earned savings.

Regardless of this, it is an option and a very feasible one at that, particularly if your business does prove to be a success. You can draw that money from savings or use family inheritance but by using your own money, it could prove to investors that you are committed to making it work.

2. Friends and Family

This is a great option if you do not have the funds available in your own account and often, it is easier to ask friends and family because you know them and they know you.

Of course, they won’t look into your finances and they won’t charge interest but there is one downside – what happens if you cannot pay them back? You could lose long-term friendships or fall out with family which to many simply is not worth the risk.

3. Take out a Loan

For most, this is the most feasible option because it enables you to obtain the funding that you need without having to rely on anyone else other than yourself.

You can find business loans here that offer competitive rates and terms that fit in with your needs. With so many lenders available, there is more of a chance of having your application accepted than ever before, ensuring that your business is given the best possible chance to succeed.

4. Crowdfunding

This is one of those options that is relatively new and relying on it could become a bit of a risk. First and foremost it involves asking people to donate towards a fund that you will use for your business but to get them to do this, you will need to prove to them just why they should donate.

You will have to show them what your business is about and why it is worthwhile for them donating. Throughout the years, some of the biggest online businesses have begun through crowdfunding but it is not always the most reliable option.

5. Release Equity from your Home

This is a similar situation to using your own savings and it is particularly risky because you are not only releasing equity from your property but also hoping that nothing changes in the housing market so that you move into negative equity.

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If you have a partner who owns the property with you then they will need convincing but if you should lose the money it could put you in an awkward position.

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Paschal Okafor is NaijaTechGuide Team Lead. The article 5 Ways to get Funds to Start a Small Business was written by NaijaTechGuide Team. The article was last modified: February 12th, 2022
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