Acquiring funds for small
business to initiate a venture is an intriguing task. An entrepreneur dreaming
to start a venture imagines big and desires to transform the imaginations into
reality. However, most novice entrepreneurs are not aware about the funding
process of small business firm.
This investment is extremely
small as compared to cash deposit of $30,000, which is required to set up a
franchise store. However, when a business entrepreneur calculates additional
expenses as such rent, payroll, inventory and advertising, it is apparent that
initiating a small venture is a great deal. Thus, emergence of requisite money to
fund a small business becomes difficult in the midst of a car loan, mortgage as
well as family matters.
By following the traditional
route and obtaining a loan from local bank, does not help the business for a long
period, since most lending companies or banks do not lend money to initiate
businesses especially without any credit history or assets.
Discussed below are four personal
These sources have the potential
and hence, entrepreneurs can think about them for acquiring funds for a small
business set-up. By employing these sources, entrepreneurs become their own
It also gives them a complete
control to use the money. A small business entrepreneur, who has a life insurance
policy, can use it to attain maximum benefits. People are aware that life insurance policy gives
the money to spouse and family in case of the policyholders death, but most
people are not aware that they can in fact borrow in opposition to cash value
pertaining to their life insurance. Later on, this borrowed money is payable at
flexible interest rates that too on terms agreed by the borrower.
The 401(k) plan attained from the
preceding employer is also a good source to acquire funds. To borrow money from
family and friends can seem very convenient, but remember that there are
several risks associated with it. Hence, consider whether the risks are worth
taking or not.
Next important source for funding
a business is credit card, as it also help entrepreneurs to kick-start their
In case these resources are
beyond the realms, then business entrepreneurs can think to take the
traditional route and decide on bank loans.
Points to Remember:
Business loans are available in
the below mentioned forms:
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