THURSDAY, NOVEMBER 25, 2021
There are numerous challenges when establishing your own small
business. Financing is a major aspect to consider when
embarking on this journey. Determining where the funds are going
to come from can sometimes turn out to be a very nerve-racking
endeavor.
This really is an obvious obstacle, that you must overcome, and
one, which often prevents many people from starting their own
small business.
Bank loans are usually the first step that most people take when
attempting to start their own small business. Banking institutions
can become demanding for things like collateral and business
plans. Banks do tend to make it hard for the people attempting to
start their own business. The demand for personal assets and the
thought of putting your home up for collateral can be stressful and
scary at the same time.
Banks can also demand that the business owner actually rent their
business space as compared to purchasing the space. They
make these demands occasionally because they do not want you
to tie up their money in assets that in the bank’s eyes will offer no
short-term rewards. Banks may even demand that you use their
money for inventory, which will offer them some immediate returns
in case of closure. You must also keep in mind that these loans
come with interest charges that will increase the amount that you
must repay.
Applying for government grants is something I recommend to
every person interested in starting their own small business. The
US as well as other countries has numerous programs that cater
to the needs of potential small business owners. Make sure you
check not only the federal government but also your local state and
state government as well for possible grants, which could aid you
in your venture. Applying for a grant is not an easy task, but it is
well worth the effort because the money does not have to be
repaid.
When it comes to relatives or friends you may be reluctant to ask
to borrow money to start your small business, but this is
sometimes a good option because they are obviously people who
know and trust you. The only downside to this suggestion of
relatives or friends is that they may feel that they own a stake in
your business, so it is important that you keep the terms clear from
the beginning.
This type of loan often has no legal binding however; it can create
serious rifts between you and your loved ones. Be sure you point
out that the money is only a loan and will by no means give them
any share or say in your new small business.
Dipping into your own personal funds is another way to fund your
small business. This is typically used with a combination of other
methods. The great thing about this approach is that you will not
be confronted with interest charges and personal conflicts that
other loans may demand.