As of July 2019, venture capitalists (VCs) had already invested $62 billion in US-based startups. If the trend continues, investments could reach more than $120 billion at the end of the year. That will beat last year’s record-breaking amount of $117 billion. These investors could help startup businesses on their road to success, but sometimes, raising funds from VCs can be a challenge, even if you have several brilliant low-investment business ideas. Here are several financing options that you can consider when raising funds for your business startup.
Apply For A Personal Loan
If you’re having a hard time looking for a financing source for your startup business, you can opt to get a personal loan. This can be done even if your business is still on the planning stage. Potential lenders will assess your credit score and capacity to repay the loan based on your personal circumstances.
There are several ways to make personal loans work. In order to be approved, you’ll need a credit score of at least 660, and you’ll need to determine how long it will take you to repay the loan. You can apply for a personal loan from banks or from peer-to-peer lending platforms, all of whom will look into your application to check your level of commitment to reach your funding goals. According to Prosper loan reviews, you only need to reach 70 percent of your funding goals to have your personal loan approved, at which point, lenders will transfer the funds directly to your bank account. Since your business is still in its early stages, it would be smart to plan each area of spending to make sure it is all used to maximum effect. Beginning your operations at home or in a rented, ready-to-use office; hiring freelancers or part-time staff; and purchasing used equipment are helpful strategies to help you minimize your spending.
Borrow From Family And Friends
Raising funds from the people you grew up with can be one of the fastest ways to finance your new business. Since your family and friends know your talents and potential, they may be prepared to lend the amount that you need for your startup. However, you need to make sure that you can pay back the full amount to avoid losing their trust and prevent this strategy from harming your relationship. You also have to prove to them that investing in your startup is a good decision, and that this will be an investment they won’t regret. It is also recommended to give them your possible payback dates so they know that you’re determined to pay your loan, and they have all the information they need to manage their own finances.
Use Crowdfunding Options
You also have the option of raising finances for your startup by posting your business plan on crowdfunding websites like Kickstarter, IndieGoGo and Fundable. Several companies, such as Pebble Smartwatch, The Dash and Oculus Rift, got their funding after promoting their plans on these sites. As long as your business proposal has been properly promoted and reached the target market, you will likely get the funds that you need. Once your goal amount has been reached, you can use it to start building your business. You may also offer rewards or returns to those who provided funds for your business. For example, those who backed up your business idea could get the first dibs on your products before they reach the market. You can also offer other freebies like shirts or bags to compensate them for their support.
By using these financing options, you can increase your chances of getting enough funds for your startup. All you have to do is to pick the best one for you and your business. You can also make use of more than one of these options to make sure that you begin your business in the right direction. However, you must be prepared to wait for a while to get the funds, and expect some rejections at first. But as long as you know how to keep track of your progress and have an open mind, you will eventually get the support from possible investors.