These days, more and more people are going into business for themselves. Although it takes a lot of hard work, dedication and of course, money, to do this, starting a small business is a great way to dive into a fulfilling career and earn a living. Of course, when you are starting out, you may need some extra cash to help you get going.
There are five ways you can get money and start up your small business.
One way you can get money for your small business is to use business credit cards. This is a fast and easy way to buy things you need to get your business up and running. However, at the same time, you have to acknowledge that going this route also means you will be responsible for paying back the balance as well as any interest rates tied to your credit card.
You can usually expect to pay at least 13 to 22 percent on your unsecured card even if your credit score is in the good range. Also, keep in mind that if you miss a payment, your interest rate might be as high as 29 percent.
Get a Small Business Loan
Look into taking out a small business loan to finance your business. Be sure to do your research on a few different options and compare small business loans on a comparison site like Lantern Credit, which matches your needs and qualifications with lenders that are available to you.
Although some may be tempting because they offer more money, you want to be sure the interest rate and terms of the loan are fair and you can pay it back. Overall, you should aim for a loan that offers the best possible rates. Make sure you check some reputable lenders as well.
Take Out a Bank Loan
Another option you can use for getting money for your small business is to take out a loan from your bank. These loans are an attractive option because they carry lower interest rates.
If your credit history is favorable, you may be able to qualify for interest rates as low as 6 to 13 percent. At the same time, it can be tricky to qualify for a bank loan if you lack collateral. You may have to put up something valuable, such as your vehicle or home, to get one. Another option is to get a cosigner who has good or excellent credit.
Crowdfunding or Angel Investors
You can also get money through crowdfunding or angel investors. With crowdfunding, people donate money to you. An angel investor is a person who donates money to your startup business. In return for their funding, they receive partial ownership. In some cases, their donation can be to cover a prior debt.
Angel investors are good options when other investors are unwilling to provide funding.
Borrow from Friends or Family
Finally, you can see about borrowing money from friends or family members. This is a good way to get money to start a small business, but remember, it often comes at a price. If you are unable to pay them back, it can drive a wedge into your relationship. Always make sure you can pay back family and especially friends.
These are some of the best ways to fund your startup. Do your homework to determine which is the right one for you.