Money is the root of all business. In order to properly start and run your business you need considerable amount of capital investment. The amount depends on your need and your goals. The biz plan will contain this relevant information. It is vital to properly capitalize your small business and to develop resources and method to obtain further capital .Any Company or business without proper financing will have a tough time competing with established competitors. Additionally, this will raise the risk of your biz eventually closing down or going bankrupt.
SOURCES OF CAPITAL/FINANCE FOR YOUR BUSINESS
1. Bank Loans: Practically, all banks offer two categories of loans to young entrepreneurs.For you to successfully receive or acquire finance from a bank, you need to present a good business idea or plan. Without doubts, this 10 Sources Of Business Ideas Will Change Your Business Strategies.
A.Business Loans: The bank is often the first place for young startups when it comes to financing. While some banks offer loans to small businesses, some do not. It depends on the policy of the banks and criteria they have established to loan money. Typically, a bank will loan money to a client if the client has collateral or has impeccable personal credit qualifications or can repay the loans with any ongoing income other than from the start up business.The criteria banks used to lend money is the amount and purpose which the loan is to be used, the primary and secondary sources of repaying the loans, the company data such as management and operations, the financial data which includes balance sheet and cash flow statements, your personal credit history, and the viability of the company.
Most loans are usually secured by the equipment, personal or assets, or the land that has been purchased. However, some banks may ask for full collateral.Getting aloan from a bank is difficult; you should know this from up-front .most starters will not get it. However, if you can grow your business steadily over a period of time banks will be more inclined to lend you money because you have proven you can operate your business many small business starters will simple have to grow first before approaching a bank.However, you may get a loan. Some ways of enhancing your success odds is basically to appear well dressed, calm, and answer questions honestly and directly, and to have a killer biz plan. Remember honest is the best policy. If the banks turns you down, you can try other banks. Some first time business start-up have gone to several, if not dozens of banks, before getting a loan. Be patient and persevere.B. Personal Loans:
Another option is to get a loan in your name, as opposed to the biz name or a personal loan. I usually recommend this type of loan, because it creates room for personal growth. The most popular types of personal loan today are home equity lines of credit, both of which are based on the Value of equity you have in your home.
2.Friends and Families:
Often a small business can raise money through friends and families especially at start-up. Again, you should treat this people with professionalism and honesty by explaining the potential risk in returns. Don’t just outline the advantages; explain more on the cons, if your business eventually fails.
Another type of this source of financing is your business colleagues or other business people you may know, have worked with, or have networked within the past.