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So, you’ve started a new business, and you’re looking for ways to get funding. First, you need to keep in mind that there is no one best way to fund a new business. Each method has its own advantages and disadvantages. Furthermore, a method that works for one type of business may not work for your business type. So, you should go through the options given below and choose a method based on the type of your business.
self finance
If you have kept some money aside during the last few years, you can use it for your business. Self-financing is a good option as you will not have to borrow from anyone. On the other hand, if things don’t go according to plan, your hard earned money will be gone forever and you will not get any returns.
If you cannot afford to lose your savings, this option may not be suitable for you. But if you have a huge amount that you have saved, you can invest some of it and save the rest for rainy days.
bank credit card
Using a credit card to finance your business is another good option, but keep in mind that you’ll be paying a large amount of interest over several decades because the interest rates on credit card transactions are so high.
The upside, however, is that as long as you’re okay with higher interest rates, using a bank credit card to fund a business is an easier option.
friends family
If you do not have enough savings, you can ask your family or friends for money. However, make sure you return the money on time or your relationship with the person may suffer. Also, if your business fails, they will be upset because they have an emotional attachment to you.
mortgage
You cannot get a bank loan unless you have a good credit record and collateral. So, what you can do is to mortgage your house or farm to get the loan. While this may get you a business loan, you will be paying back the loan if your business turns from failure to success. If you fail to repay the loan, your house or farm may be sold.
Angel investors
One of your friends or family can become an angel investor for your business. They will provide funding for your small business in exchange for a share in the ownership of the enterprise.
Before you sign an agreement with your angel investor, make sure the terms and conditions of the agreement are clear to both of you. This will help you prevent disputes in the end.
So, there are some good options for you to get investment for your new venture. All of these options are good and work for small enterprises. But make sure you have evaluated all the options before choosing one. The success of your business depends on capital and if invested wisely, your chances of success will increase.
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