How to Acquire Funds for Your Startup Business: A Guide to Business Financing Options

One of the most difficult issues for any business, especially a small business or startup, is how to raise funds for projects. You may not be able to fund a business from your savings or friends’ help alone. To that end, many organizations, banks, venture capitalists and government organizations provide funds to businesses that have the potential to turn into something big.

This article discusses two of the most important sources of funds for startups — leases and loans.

Leasing:

Many small businesses and startups prefer to lease property and equipment rather than purchase it, since it is cheaper and less risky in case the business fails. Professional firms help startups hire or lease equipment and provide funds for the purpose. Many companies are dedicated to leasing for businesses in specific industries. Therefore, whether you have an IT business, agriculture or manufacturing business, there is a lease-purchase firm out there ready to finance your business.

Apart from providing leasing and mortgages, finance companies also provide startups with information on other sources of funds. In fact, with the advent of the Internet, you can access information on many different types of funding with the click of a mouse.

Startups may face some initial difficulty in getting a business lease since most leasing companies prefer to work with established businesses. However, there is no reason to lose hope. There are many companies, who specialize in financing startup enterprises. With a little patient research, you will be able to locate some lease-purchase companies willing to finance your business. Many companies even finance individuals working from home, so you will find finance options even if you work from your home office.

Loans:

You can opt for short-term or long-term loans depending on your business needs. If you wish to finance short-term projects, then short-term loans are ideal. For acquiring assets, however, or for business expansion, a long-term loan might be your best option.

The principal amount of a term loan is based either on the collateral of what is being purchased or on the profits the business anticipates earning during the duration of the term. The term period may be anywhere from 1 to 10 years. One of the major advantages of term loans is that the interest rate is fixed. In a market where interest rates are rising, this is a highly desirable factor for the small business. No matter what the financial situation of the company or the interest rate market, the company will pay the same rate of interest on the loan principal.

Before you sign with any financing institution for a loan, grant or investment, it is best to consult a business advisor who can tell you the pros and cons of each kind of loan. There are many flexible financing options available for startups today, and entrepreneurs need not give up on their dreams or ideas because of a shortage of funds.