If you are thinking about starting a business, then getting enough funding becomes one of your main concerns. You may have a great business idea and offers that can solve many consumer’s pain points. But without enough funds, your startup can quickly crumble. But what if you don’t like the idea of applying for a business loan? What else are your low-risk options to getting enough funding for your new business?
Many aspiring entrepreneurs are reluctant to fund their startup with a business loan. This is since acquiring a huge amount of debt from the bank can be a very risky move. Thankfully, there other ways to finance your new business.
Sell High-value Assets or Belongings
These days, many people are house-rich. These pertain to homeowners who have high-value properties but are short of cash to fund different endeavors. You can start downsizing, sell your home, and use the extra funds to start a business.
Selling your home during the pandemic can be a smart move. Numerous buyers are out in the market looking for houses they can buy. They are looking for houses with extra outdoor space, extra rooms they can use for remote work, and even space where their kids can learn from home.
Since there are lots of buyers searching for homes for sale, you get the chance to receive numerous offers. Some are even buying properties without a real-estate visit. They are viewing houses online, are letting their real estate agents do the talking, and are doing transactions online.
Aside from your property, you can also consider selling your other high-value belongings. This way, you lessen the need to apply for a loan, use your home as collateral and avoid putting your home at risk for foreclosure. You can start downsizing your lifestyle and kick start your small business with fewer risks.
Borrow from Your Loved Ones
If borrowing from the bank is something you are not comfortable doing, you can consider borrowing from your family or friends. You can try convincing them to invest in your business and pay them gradually as your business starts making a profit. But like any loan, you need to make sure to pay them back to avoid ruining your relationship with them.
Accepting funds from family and friends are often a lot more flexible compared to regular loans. They are often more forgiving when it comes to payment schedules. If you’re lucky, they might even waive you the interest fees.
Be sure to treat family or friends’ loans as a business deal. Present your business idea, explain how you plan on paying them back, and include a formal agreement where both parties will sign. The agreement should include how much their expected interest fees and how the repayment schedule will be.
Offer Business Shares in Exchange for Funding
Another way to obtain funds for your startup is to do crowdfunding. You can pitch your business idea to other people and offer them shares of your business. This way, you get to mitigate financial risks, expose your offers to more audiences, and validate the demand for your products or services.
This also allows you to tap on existing communities that are already looking for the kind of solutions your new startup is offering. One of the drawbacks you need to be wary of is the fact that someone might steal your business idea. If you are not careful and don’t protect your idea asap, someone could launch a similar offer before you do.
There are other ways to fund a startup. But like any options, all come with their fair share of pros and cons. Weigh in your available options before choosing. As much as possible, talk to the pros to get an expert opinion. This way, your finances won’t suffer and you can get the most out of your new business venture.
