Dorotea Tuzon

There are several ways one maybe able to finance his or her newly opened business:

1. Self Funding

You can get from your savings and from your 401K to get your business started. Another traditional way, is borrowing money from your family or friends to finance your business. This can be advantageous for you because you can set a re-payment scheme that do not require you to pay any interest.

The best part of self-funding is that you don’t have to give away any portion of your business and you have your full control over it.

2. Loan

You can also visit a bank or any lending companies to secure the necessary amount of money that you will need for your business. One of the pitfall is that you have to pay interest over the principal amount that you owe from the bank or lending company.

Another important information, is that before you get funding they will have to run your credit score and this may affect the ability to get the necessary amount you need to operate your business.

3. Crowdfunding

You can also secure money from a group of people known as crowd funders. Unlike securing a debt from any company, you don’t owe anything from the these people but an appreciation item will be sufficient in exchange for the fund they provided you. This is a low risk way of getting funding because if your business fails, you don’t owe money from anyone.

4. Funding from Investors

You may also secure funding from venture capitalists or investors. You may present to them your business plan and they can provide you the necessary amount that you need. If you have seen the TV series called “Shark Tank,” it is a classic example of how business pitch to investors to be funded.

The downside of this financing scheme is that investors are normally not interested in debt repayment but rather they will ask to gain control of your company which can be in a form of royalty or shares to name a few.

Final Thoughts

There are many ways or you to fund your newly opened business. Before you securing financing, weigh the pros and cons and select the best that will suit your needs.