Finding the finance to start any business can be tough, no matter the economic climate one is living in. But there are some financing techniques which can help anyone who wants to finance their start-up business. This includes:
Factoring is a finance method where a company sells off its receivables at discounted prices to cash straight up. It's a conventional method which is used by businesses who have poor credit or those who are apparel manufacturers since they have to fill in their orders way before they can get paid. But it should be kept in mind that it is ultimately an expensive way to raise funds for the company since companies who sell receivables have to pay a fee, which is a percentage of that total amount.
Lending structures and standards have certainly got a whole lot stricter, but there are banks as well who earmark fund to lend it off to small businesses.
Yes, this is a risky business because if you call too far behind regarding your scheduled payments, then your credit score will be bashed. But on the other hand, if you pay just a minimum amount, then you might never get out of a hole. But, planned and responsible usage will get you out of minor or occasional issues. It can even extend the payable period of your accounts to shore up their cash flow.
There are a variety of crowdfunding sites which are an effective way to raise money and that too for a little cost. You will have to set a goal in regards to how much money you would ideally have to increase within a fixed period. Then family, friends, and strangers interested in your project will pledge money using the site. Sites like kick starter have funded a lot of projects which have ranged from documentary movies to rock albums and everything in between. But it should be kept in mind that this isn't a means to guarantee long term funding and you will have to offer incentives in exchange for getting money.
A lack of credit history or collateral will not allow you to secure a loan through a bank and this is where microloans come in. Microloans are for a minimal amount, and they are often so small that commercial banks don't bother with them. So you might have to turn to a microlender, like a non-profit organization which works differently than the banks. You might get smaller loans here, but you will also need less documentation.
These options will help you secure the finances to start up your business, and if all else fails, you can always try asking your family and friends.
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