You have finally decided to start your own small business, you’ve probably written your business proposal, and are thrilled about your business idea, and can’t wait to start. Unfortunately, you don’t have the finances to make this dream come true. Here are ways you could come up with some capital. Bank loans According to James Ruzindana, an entrepreneur in Remera, getting a loan from a local bank is the first choice that most people consider when funding a new business. However, he notes, on many occasions it is tough to attain a bank loan on the root of a business plan alone. This is because banks can’t use your idea as collateral. To him, though getting a business loan is regularly reliant on characteristics like the health and wealth of your business, getting a personal loan is entirely dependent on your personal characteristics. The business person also notes that lenders strictly examine your credit score, source of income, debt-to-income ratio, and proposed use of the loan. Ruzindana says that banks often want to see a history of profit before they let you take their money, which is of course a problem for a start-up. Apply for grants He also says that you can get free money. Finding a grant to fund your young business isn’t easy. That’s why it doesn’t happen often. You could be able to get a grant from a number of sources, including, grant programmes, or state and local government grant programmes. Private grant organisations are formed for specific types of businesses, and certain sections of the population. There are small business grant programmes for experts, women, single mothers, and other groups. Personal savings “This is the most ideal source of fund for most businesses. It comprises inheritance or personal savings created or saved from your preceding happenings. The capacity of money obtainable for usage hinges on your income, your aptitude to save and to consume and the level of taxation. This source of fund institutes no obligation to your company and it is generally interest-free,” Ruzindana says. Partnership A partnership is a legal form of business in which two or more individuals share the management, profits, and liabilities of a business venture. With an outlook to increasing the capital base of a new venture, you may decide to take on a partner or partners. Ruzindana adds that once you are sure of the person you want to partner with, it is important to identify the qualities your partner should possess. You should be able to answer the following questions. Do you know your potential partner well? Do you and them have experience working together? If so, do you have a good fit of skills? Do you have confidence in your potential partner’s abilities? Other questions to consider are: Do you and your potential partner communicate well? Do your working styles complement each other? And do you see a partnership as a positive step? Business experts advise that if you find the right potential partner, you will have to draw up a Partnership Agreement. Money lenders These are individuals or a group of individuals (distinct from banks and financial institutions) who offer small personal loans at high rates of interest. The entrepreneur highlights that you ought to know and fully understand the terms and conditions of the contract before you borrow money from them. This is because some money lenders give conditions that look good but risky. Some contracts are also constructed in such a way that you end up losing your company if you fail to meet up with the terms and conditions. Customers This source of fund is only possible if you have reliably built an exceptional reputation in your field of business. Your customers can help finance or partly finance your business by making advance payment for goods. Alternatively, you can give the customer goods on credit. You can also generate funds by granting cash discount to customers who make early payments.
