You have developed an idea for the perfect business. You have done the research and are sure that this could be the venture that could finally free you from your 9-to-5 and provide you and your family with the security you’ve always wanted.
There is just one step left: raising business funds.
In many ways, this is the most difficult step. That is because it is, for the most part, out of your control. While you can develop your concept, approve all marketing plans and have a hand at all times in your customer service, you can’t force the bank to loan you money.
Feeling ready to launch but lacking the necessary funds is a frustrating place to be, but when raising business funds there are many more ways to do so than just by visiting a bank.
Private Investors
Private investors are a good option for many, because you are often able to speak directly to the person who owns the money.
When you go to a bank you are talking to an employee who represents the bank. That employee has strict lending guidelines that they must follow and rarely are they allowed to make exceptions.
On the other hand, when you have a meeting with a private investor, you are speaking directly to the person whose money you are asking to borrow. This means that the person has as much flexibility as he wants.
While he probably has lending guidelines, it is up to him to bend those rules if he likes you or your business idea enough.
Be sure that you know your stuff when you enter a meeting with a private investor.
This is likely a person who has succeeded in business at one time or another, so they are going to expect you to be knowledgeable about the business you plan to start as well as about the competition.
The more you know, the better you will look, so do your homework and impress your private investors.
Finance Companies
With both banks and private investors, personal credit history is going to be a factor.
While finance companies will explore your personal credit before making a decision, they are often much more lenient than banks. The downside is that they usually charge a much higher interest rate.
Still, when trying to raise business capital funding, you might need to make such sacrifices at the beginning.
Home Equity
While many small business owners have tapped their home’s equity in order to raise the needed business capital funding, this is now a risky move.
Because of the housing market failure, tapping into your home equity should be a measure of last resort. If your business fails and you can’t afford the loans, you will lose your home and your future security.
If you know that you can handle the additional payments even if your business fails, it is an option you could consider, but do so very carefully.
When working to secure business capital funding, there is more than one option available. With a little research, you can find the one that is best for you.
