Once you've completed the important factors of starting a business, like your business plan, you may need to obtain financing or get investors to share your enthusiasm and passion. The following are five major sources of funds.
Family and Friends
Friends and family are a clear option of funding, but this strategy certainly doesn't come without risks. Unfriendly as it sounds, you must lay the details in writing, so that both you and your family can keep things straight with the IRS. Of course, your connection with them shouldn't be the only one on your mind. Laying the terms of your loan in writing can help reduce misunderstandings, resentments and hostilities down the line.
Bank Loans
Most private banks aren't intolerably interested in lending to small businesses, which are often viewed as high-risk propositions. Unless it is a community bank that offers loans and grants through a state or city's business-development office, entrepreneurs should view a bank loan as a last resort for lending. Of course, most banks are more than glad to give straight home-equity loans or home-equity lines of credit. In such cases, banks don't think about what the money is going to be used for, since the borrowers' homes supply as collateral.
Venture Capitalists
If your company profit from a hot new technological drift or is selling a new drug or health-related invention, you might consider approaching venture capitalists for funds. However, making a small business eye-catching to skeptical professional investors takes a great deal of financial ability and some luck and thus isn't compatible for beginners.
The Government
The government has always had a charming spot for small-business holders. Some in fact enterprising individuals might be clever to score money at the state, federal and local levels. Angel InvestorsAngel investors are rich persons who empower in private business ventures. An angel investor uses his own personal funds. Some of these angels invest in establishing for the excitement of entrepreneurship, to stay current on the latest developments in a particular field, or are interested in an innovative idea.
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