It’s easy to come up with a business idea. Finding a way to run that idea into a reality can be more challenging. Turning a business idea into an actual business needs capital. Without capital, your business idea isn’t going anywhere. That said, here are 10 ways you get funding for your business:
1. Loans
There are plenty of loans that you can avail of. Both banks and SME lenders offer small business loans. The difference between a personal loan and a business loan is that a business loan is specifically given for funding businesses. The difference between getting a loan from a bank and a lender is the requirements.
SME lenders often ask for fewer requirements, especially because they know you’re only a small business. So they try to make the loaning process as quick and convenient for small businesses as possible. If you have any debt and are looking to pay off that debt to start your business, you can also avail of a debt consolidation plan in Singapore.
2. Grant
Most people think that grants and loans are the same things, but they aren’t. Loans are funds given by a financial institution to a business that is expected to be repaid. On the other hand, grants are financial aids given by the government to a business that will benefit the public. Unlike loans, grants don’t have to be repaid. You are also only given a certain amount decided by the institution. Loans allow you to negotiate an amount.
Although grants are great since they’re free money, you have to undergo an intensive screening process. Plenty of organizations, enterprises, and institutions try to apply for grants. Financial institutions can’t give out grants to every organization. That’s why they have to screen applicants. Which means you’ll have tons of competition to worry about. To know more about government grants, you can visit usa.gov.
3. Own Savings
The most traditional way to fund your business is to save up for it yourself. But of course, this can be difficult and risky, especially if your business fails or encounters any financial problems. The good thing about using your savings is that you don’t have to be liable to anyone but yourself. But then again, if you suffer any financial losses, you suffer it alone without anyone or anything to fall back on.
4. Family or Friends
For some people, asking for financial help from family or friends feels wrong. But if they’re willing to help, then why not accept the offer? If your family or friends are generous enough, they usually won’t pressure you to pay them back right away. Unlike banks that expect you to pay back the money at a certain time and with interest. Just make sure to pay your family or friends back, or it can result in broken relationships.
5. Crowdfunding
Most start-ups nowadays rely on online crowdfunding platforms to fund their ideas. Crowdfunding is one of the easiest and fastest ways to fund your business idea. You are getting strangers online to fund your idea. The only thing you’ll need to have a successful crowdfunding campaign is a brilliant pitch and marketing. With crowdfunding, you aren’t pitching to a small group or company. You are pitching to the public. Social media will become your biggest ally here. The more people that know about your idea, the greater your chance to get funding.
6. Investors
Have you ever watched Shark Tank? Well, the “Sharks” are what you call angel investors. Angel investors specifically invest in start-up businesses. Much like crowdfunding, you’ll need to have a brilliant pitch to convince the investor your idea is worth funding. Take some cues from the people that have convinced the Sharks to invest in them. That’s how good your pitch should be. The great thing about angel investors is that you don’t only get financial aid. You also end up with a mentor.
7. Venture Capitalists
Venture capitalists are usually firms that fund businesses that show potential in growth. The difference between angel investors and venture capitalists is that angel investors fund businesses at their initial pre-revenue stage. Venture capitalists are firms that only start investing in businesses that are already showing signs of profitability.
8. Microfinance
Microfinance is a financial service aimed to help low-income individuals that banks usually consider too risky to lend to. Banks require plenty of documents and paperwork to get a bank loan. Microfinance is there to support businesses that come from poor areas that may not meet the requirements of banks.
9. Bootstrapping
Bootstrapping usually works if you ask for payment before the actual product or service is given. In bootstrapping, the business supports itself. You don’t use your own money or borrow from an institution. You use the money paid to your business to keep it running. It’s difficult and risky. But if done well, it can work.
10. Partnerships
The difference between partners and investors is that partners have a bigger responsibility to the business than investors. Investors are merely there to provide funding. Partners are expected to share some of the work, whether owning, managing, or creating the business. But silent partners also exist.
There are plenty of ways to fund your business. It could either come from your own pockets or borrowed from a close friend or an institution. If you genuinely believe that you have a brilliant idea that will succeed. Don’t be afraid to ask for help, especially when it comes to financial aid. The only way you’ll turn your business idea into a reality is through funding.
