Did you get a great business idea in the mind, but are you worried about how you going to arrange funds for executing your business plan? Then, you need to relax. Unlike olden days, there are so many options for funding your business these days, not just being limited to only bank loan and mortgages.
Here are few of the sources which can help you in funding your business:
- Bank loans:
Even though there are so many other options available in the market, but bank loan is still the most popular and conventional mode of funding the business. You can avail a short-term, medium-term, and long-term loan from the bank depending upon your requirements. In return of money extended by the bank, the interest is charged as well as some assurance of repayment is kept by the bank in the form of the mortgage or personal guarantees.
- Angel equity:
In this case, you need to sell a part of ownership to another person or business to get funding for your business. Angel investors are basically the expert individuals or the business who are well known in the industry and are ready to invest in your business in exchange for partial ownership. So, more than just focusing on economic returns, they also provide your business a credibility among other investors.
You can even ask advance payments from the customers on the certain terms and conditions to solve your cash crunch problem. It is a good way to arrange funds at a relatively low cost to keep your business running. Advances from customers also display your credibility and commitment to the customers that they are ready to give you advances beforehand.
A lease helps you to obtain an asset on an agreement with other parties in exchange for a rent or lease payment which is generally due annually. Once the lease is over, the asset is returned to the owner, if the lease is not renewed or asset is not purchased. So, there is no need for you to invest huge sums in down payments while purchasing the assets.
- Friends and family:
Taking a loan from the friends and family is the best way to fund your business at a very low cost. But, you need to make sure that you make a proper agreement while taking a loan from them to avoid any future hassles and misunderstandings. The document should clearly specify the amount of the loan, the rate at which it is borrowed and other terms and conditions as well.
These are just some of the popular ones, but the options are numerous. You just need to choose the right one in accordance with your requirements.
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