Financing A Business Venture From The Scratch

Starting a business is one of the most demanding part of the business, especially the part that involves finances. Obviously, many people have brilliant ideas of the kind of business they want to venture into, but finances have become the major stumbling block to that idea. Here, we shall take a look at some of the potent ways in which one can effectively finance their start-up business. One thing to know is that finance is an integral part of business that one needs to pay attention to, especially when starting a new business.

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1. From personal funds and savings

This is typically the first point of call when it comes to financing a new business. There must be something to give you a boost, something to fall back on, something to get started with before other supports can be made available to you. This can also cover the savings you have made in liquid funds or in assets. Obviously, even when you want to collect loan from a financial institution, these assets will come in handy as a form of collateral to secure the loan. So you need to have something at hand if you want to venture into business, because this may be the quickest financial help that may be made available to you when you need it the most.

2. Financial gifts and support from friends and family

This is also another way to fund a business at start-up. There are times that your personal savings may not make the required boost that you need, so you can call onto your friends, family, and well-wishers, and in most cases, they may respond positively. Sometimes, these funds can be given on the basis that is will be returned in cash or kind, or it may be an outright gift. In some cases, some of your friends or families can assist you with their own business assets so that you can use it for a while until you are able to stand on your feet.

3. Look for angel investors

There are individuals or group of people who have the capital and are looking for either a start-up or an infant business to invest in. In exchange for the capital and funds that they are bringing into the business, they will earn part of the company's position and may be among the board members. This type of investment is a boost for a business owner who has an idea of business but lack the required capital to go about it. The investor brings funds and earns a place in the business, while the owner brings idea.

4. Borrowing from micro finance institutions

When the above three sources of funds may not be feasible or sufficient, then one can resort to borrowing from a micro finance institution. It is easier and more convenient for a start-up business, especially an SME (Small and Medium-sized Enterprise) to borrow from micro finance institutions. This is because they have lower interest rate and the have lower requirements; some of them do not even require collateral. In this part of the world, there are some loan facilities that are specifically meant for SMEs which a business owner can take advantage of.

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5. Grant from government

There are some grants that are usually sponsored by the government to give business owners the funds to expand their business. For example; there was the FADAMA project in this part of the world which was a World Bank assisted project to help provide grants to farmers and other people into farm-related businesses. All the farmer needs to do is to submit a road-map of their agro business with a proposal to the organisation and after taking a review of it, they will determine how they can be of help to them. Apart from this, there are lots of other government sponsored grants that can help small business owners.

6. Bank loan

When other options may not be forthcoming or when they are insufficient, then the business owner can get a loan facility from the commercial bank to help grow the business, after which they will be made to pay back within a stipulated time with interest. Different banks offer different terms and conditions for loans, so one needs to compare and know the one that is most convenient for their business. More so, to secure loan for your business, you must have a good working business plan and also be credit worthy.

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