Starting your own business can be both an exciting and daunting time in your life. One of the first obstacles you will most likely face is obtaining capital to get your enterprise off the ground. Although the route most normally taken is to simply apply for a bank loan, the reality is that not everyone qualifies. Fortunately, there are a few alternative methods you can use to fund your business without resorting to a bank
One of the most common issues aspiring entrepreneurs have with bank loans is the amount offered to them. Since they are unproven, they might not be given the necessary capital to conduct their new business as they want to. However, it is possible to accumulate greater funding by gathering investors. Finding investors is often difficult, but the payoff is often better. According to Salesflare, the best way to attract them is to first carefully hone a sales pitch regarding your company. You should also be able to fully explain what you’re providing your investors in terms of security. This usually includes a percentage of the company, and it might involve royalties or some measure of control.
Tap Into Retirement Funds
Let’s say that investor funding is out of the question, and you need to find other ways to raise capital. This is completely understandable as many entrepreneurs simply don’t want to let go of company control. Many business owners starting out are now seeing the advantages of using the retirement funds from their 401(k) accounts to finance themselves. According to Franchise Gator, a major downside to this method is that failure of your business can mean delaying your retirement. Of course, if you want to have a clearer and less risky path to running a business, you can opt for using these funds to invest in a franchise. There are plenty of companies who are seeking people to become franchisees for their concepts.
If the amount of capital needed is too low to warrant a traditional business loan or too high for investors to be interested in it, you do have a third option. Through asset financing, you are able to borrow against assets you currently hold. This might include equipment, intellectual property, stocks, or real estate, just to name a few. You may utilize the help of specialized providers who are specialists in this particular field and can steer you in the right direction.
There’s no doubt about it. Starting a business from the ground up can be expensive, and banks can be difficult to deal with. Fortunately, there are other ways to raise capital without a bank lender. By attracting investors, tapping into retirement funds, and asset financing you can be well on your way to obtaining the capital you need to start your business without a bank lender.
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