One of the toughest parts about starting a new business is finding working capital. While you may have access to funds in a savings or retirement account, it may not be enough to pay employees, buy equipment and pay for supplies needed to fill order. Therefore, it is important to know where else you can turn to find the necessary working capital to sustain your company.
Crowdfunding May Be a Viable Option
Crowdfunding is a tactic that involves asking dozens or hundreds of people for small donations. In many cases, business owners use crowdfunding as a means of getting paid for an order before it actually gets sent to the customer. If too few people choose to pay for a proposed product or service, it may signal that there is not enough demand. Therefore, going this route may be a good marketing and public relations tool as well as a great way to finance a business.
The SBA May Have Loans Available
If you don’t think that you can get financing from a bank or credit union, it may be worthwhile to check out what the Small Business Association (SBA) has to offer. Depending on how large your company is and what its needs are, it may be possible to obtain grants instead of loans. It may also be possible to get loans with low interest rates or other favorable terms.
Ask Friends or Family Members for Cash
Close friends or family members may be willing to back your idea with their own cash. Ideally, you will come up with a business plan that shows a friend, parent or sibling how you plan to repay their money. It may also be in your best interest to create a formal loan repayment agreement. While those closest to you may be understanding if they don’t see their money back, it is just as likely that you could strain a relationship by not making a good faith effort to repay a loan.
Credit Cards May Be Helpful at First
If your business doesn’t have a track record of making money over several quarters or years, it may not get a loan it its name. Therefore, you will need to get a personal loan in your name or borrow using a credit card. To ensure that you keep track of what you owe, it may be a good idea to use tools such as those offered at https://www.swizznet.com/hosting-solutions/quickbooks. Doing so makes sure that you get what you are owed from customers, which will make it easier to repay debts and avoid having to file for bankruptcy.
Starting your own company can be a great way to gain more control over your career. However, it will take a lot of personal sacrifice and financial risk. Therefore, it is important that you know where you can go to keep yourself and your company financially solvent as you go through the process of growing your company into one that is profitable on a regular basis.