Eight Ways to Access Start Up Capital

Finding financing for a startup business can be a daunting task. Although the reward of business ownership completely outweighs the work it will take to create it. We have put together Eight ways to access startup capital in hopes of helping you on this journey.

Personal Savings

Not everyone has a large personal savings but for those who do it may be the best option to cover startup costs in your new business. This will allow you to fully profit from your new business as you will not have a loan to repay. The downside is that if your business is not a success you may lose your personal savings.

Take out a Loan

Taking out a loan is another great option when starting a new business. However this can be difficult to obtain as many lenders view new businesses as high risk and tend not to offer startup business loans. The Small Business Administration could help you in the lending process by offering an SBA guaranty on the loan. You may also want to consider putting personal collateral up to secure your loan, this could be your family home or other large collateral of value.

Friends and Family

Friends and family want to see you succeed in your new business and are fully aware of just how much money it takes to cover startup costs. Turning to friends and family to contribute small amounts of the capital you need could be a great way to get the startup you need.

Angel Investors

Angel investors look for one in a million business ideas that they think will be a success. Turning to angel investors can get you up to 100% of the startup costs for your new business. However this does come with its cons as the investor could consume partial ownership of your new business before it is even up and running.

Tap into your 401K

Tapping into your 401K is another great option to cover startup costs as you are borrowing from your retirement money, this is your money and you should not have to pay it back. There are often fees associated with doing so and if you do not find success in your new business you could lose your retirement savings, if things work out you could possibly retire earlier than planned.

Use a Credit Card

More and more people are using credit cards to cover startup costs. While this can’t be used alone it can help cover equipment and inventory purchases to get your business up and running. The downside is many credit cards hold high interest rates, costing double if not more to repay the credit used.

Check Out Crowdfunding

Crowdfunding sites like Kickstart.com are a great way to raise money for a relatively low cost. This site allow you to select the amount of money you would like to raise over a specific amount of time, allowing your friends, family and strangers to contribute to your startup costs.

Pledge Some of Your Future Earnings

Through online marketplace called the Thrust Fund you can pledge some of your future earnings to get the capital you need to start your business. Many new business owners have used this site turning their startups into multi-million dollar companies.

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