Startup Business Financing is a key factor to the survival of the company. As a matter of fact, a recent study done by a survey company shows that almost 93.8% of businesses fails in the first year. This is due to the fact that most of them are lack of funding.
However, financing a startup or small business can be proven difficult especially for those with poor credit. While there is no standard minimum credit score you must have to get a business loan, traditional banking institutions do have a range that they would consider acceptable.
If you have no collateral to offer and a low credit score, consider an alternative loan solution. Here are some financing options that you may consider for your startup business.
Look For A Venture Capitalist
This is a decent decision for new businesses who don’t have physical collateral to fill in as a lien to loan against for a bank.
Venture Capital or VC is an investment in a business venture. VCs provides mentorship, expertise and goes about as a litmus trial of where the company is going, assessing the business from the sustainability and versatility perspective. They usually invest in startup or a business against equity and exit when there is an IPO or an acquisition.
Obviously, with the sizeable amount of funding that is given, there are conditions connected to it. Much of the time, VC firms have targets for you to achieve within a timeframe. They will also have percentages of ownership to capital are negotiable and usually based on a company’s valuation.
Get Funding From Other Registered Financial Institutions for Business Financing
A financial institution is an company entrusted to managing monetary and financial exchanges like loans, credits, ventures, and currency trade. FI envelop an expansive scope of business activities inside the financial services area including banks, trust organizations, insurance agencies, financier firms, and investment firms.
At Limra Assets, our expertise in corporate finance and sizeable network of investors enables us to finance a variety of circumstances. We offer an exclusive range of Shariah Compliant Financing Solutions. This is to meet the needs of a diversified client base involving corporations as well as high net worth individuals.
Allow us to empower you with our innovative Shariah Compliant Financing Solutions which is the only of its kind in Malaysia. We have extensive experience with a wide range of industries with considerable potential for growth and value creation.
Crowdfunding As An Option For Business Financing
Crowdfunding is one of the fresher methods of subsidizing a startup that has been acquiring popularity lately. It resembles taking an advance, pre-request, commitment or ventures from more than one individual simultaneously.
This is how crowdfunding works:
In most crowdfunding campaigns, you will see a goal amount, which is how much money you want to raise. Then comes how much money has been raised so far and how many people contributed the crowdfunding campaign.
Lastly, it’ll show how much time is left for the campaign.
Get Angel Investor To Start You Up
Angel investors are people with excess money and a keen interest to put resources into forthcoming new businesses. They likewise work in groups of networks to go through the proposal prior to committing. They may likewise offer mentorship or advice alongside capital.
Angel investors have assisted with firing up numerous noticeable organizations, including Google, Alibaba and Yahoo in the past. This alternative form of investing most part happens in an organization’s beginning phases of development, with financial backers expecting an upto 25-30% value. They like to face more challenges in venture for higher yields.
Look For Funding From Business Incubators & Accelerators
At the early stage, startup business can consider Incubator or Accelerator programs as a funding option. Found in pretty much every country, these projects help many new companies each year.
However, there are few key contrasts between the two terms. Incubators resemble a parent to a kid, who takes care of the business by giving sanctuary, knowledge network and mentor them.
In contrast, Accelerators helps the business to zoom or take a giant leap. It’s like stepping on the gas pedal to speed the business forward, x10 times.
These projects typically run for 4-6 months and require time responsibility from the businee owner. You can likewise make great associations with mentors, financial backers and other individual new companies utilizing this platform.
Conclusion
If you want to really grow fast, you probably need external sources and funding. If you’re doing everything on your own and remain without external funding for too long, you may be unable to take advantage of market opportunities.
While a large or excessive lending options may make it easier than ever to get started, you should ask yourself how much money do you really need.