Have you been struggling to raise funds to get your business off the ground? Trying to gather enough capital to invest in your startup company or small business can be a minefield when you haven’t been in charge of running a company before. So what type of funds can you get when you are working in an SME? Below are six ways to achieve this. All are now a lot more common than a few years ago. But if you are new to the world of business, this may give you some pointers.
Start Up Loan
A common way of securing funds in the early days of businesses is to obtain a start-up loan. If your business is in its infancy, usually up to two years old, you are eligible for a start-up loan. Usually, quite a sizeable amount can be obtained so you can get everything up and be running with a secure amount behind you.
The benefits of crowdfunding are various. The idea is that you can raise the desired cost you need by posting a pitch on a crowdfunding site, like Kickstarter, and people can donate whatever little amount they want. If many thousands of people donate a small amount, your goal can be reached in a relatively short amount of time. So, if there is a little part of the business that doesn’t have the desired funding, like IT support, and you need extra equipment. Or you need to fund some outsourcing materials, this will help.
If you manage to impress a business angel, they may provide investment in return for an equity stake. Business angels are usually entrepreneurs. So they know exactly what you’re going through, which can help with the empathy factor. Other benefits are that the pitching process is far less daunting than you might think. If you can put together a good pitch with realistic growth projections while also being prepared to give up a share of your business, this could be for you.
This is where a lender uses a piece of your equipment as collateral for your business to secure funds. Usually, the lender will only fund the amount the equipment is worth. It is worth bearing in mind that if your business doesn’t have a huge amount of machinery, this may not be worth it.
An advantage to a startup with little money behind it is that you can receive money upfront before debts and invoices have been paid.
Under the terms of the agreement, the financier purchases a fixed percentage of your future card transactions at a discount. Then they put the cash into your bank account, and it’s usually within ten working days, which is quite a speedy transaction. Repayments are scheduled at a pre-agreed percentage of every transaction, and it is usually between 10 and 20%.
A peer-to-peer exchange site can put you in touch with private lenders. This creates a personal relationship between you and the lender. A benefit to this is that you can negotiate terms and funds in person, which may help secure some extra funding.