Day: March 31, 2020

Eight Ways Entrepreneurs Can Finance their Business Ideas

Every entrepreneur or startup owner faces the biggest concern of financing their business. With minimal experience and no business background, entrepreneurs find it very hard to get the money at the initial level. Be it working capital or provision for the troubled times, you need money to run and grow your business. Let’s discuss some of the options that can help you get funding for nurturing your business ideas.

Before digging deep into the topic, it is necessary to go through two ways of financing your business — Equity and Debt. The equity option enables entrepreneurs to fund their business by providing an ownership stake to an investor. Here, there is no obligation of repayment. But then, you need to give up a part of your ownership in the business. It can also make you lose control over the company in the long run.

The debt option is like taking a loan for a specific period. You have to pay interest on the amount. Here, the ownership of your company is not at stake. But, if for some reason, you fail to repay the loan, the lender can take your company into liquidation. In such a scenario, you lose your company. The debt option is worth only when you have a strong financial backup.

Equity-based Funding

how to finance your startup idea

Self-funding- This is the safest way of funding for your startup. You can either use savings, personal debt, or both for your business. Also, you can consider selling assets like a second home or a boat to generate cash for your company.

Friends and family- This is a source of both equity and debt funding. Though this seems a handy source of funding, you need to remain cautious while assigning part of your business among friends and family members. Many businesses fail because key parts of business go into the wrong hands. Also, when the capital erodes, it hurts feelings and ruins friendships.

Angel investors and Crowdfunding- Affluent investors can bring capital in the startups. They are known as angel investors as they are always willing to invest in ideas they find lucrative in the future. Angel investors can also form a group of investors to spread risks and assist you to do extensive research. Local angels and the Chamber of Commerce are also good sources for funding your business at the initial stage.

Crowdfunding is also a concept similar to angel investors. The only difference here is that there is a large number of people or investors who contribute to your startup idea as per their wish. Crowdfunding has certain norms and its success rate is lower than that of angel investment. Crowdfunding is based either on equity, debt, or rewards. You can select the most suitable platform from hundreds of crowdfunding platforms.

Partnership- This is one of the strongest sources of funding for your business. Strategic partners can not only bring investment but also give new thoughts to take the business to the next level. Partners can also help your business by managing key processes. Let’s take the example of a property management company. A strategic partnership with a property maintenance company can help this company to provide 360-degree solutions.

Debt-related Funding

financing your startup

Lenders- Many lenders and organizations lend money to small businesses and startups. They lend money either at higher interest rates or ask for assets as security. Here, the interest rate is a bit tricky. For example, if the interest rate is 3% and the term is one month, then the actual annual interest rate is 36%. This is quite high as compared to a 3% rate.

Lenders are of two types- Traditional and Government lenders. Traditional lenders can be the first choice. Banks and credit unions are included in this type. This type of lenders, however, do not fund any innovative or experimental ideas. Government lenders work with the government arms to get more funds with some risks.

7a Loans- It is a type of loan that assists startups or businesses that have no collateral. Entrepreneurs with no personal or business assets are the most eligible candidates for this type of loan. However, a common man may not get this type of loan. What makes this loan attractive for entrepreneurs is the fact that the 7a loan has simple T&Cs. Entrepreneurs need to give a repayment guarantee of 85% to take this loan.

Banks- Both government and private banks lend SMEs and startups. But they need a track record and want to secure their loans by some of your assets. Banks are, however, not much friendly for SMEs and startups. Many entrepreneurs tend to stay away from banks at the initial stage because they have issues of both working capital and initial funding. In today’s time, banks have quickly become out of focus for entrepreneurs.

See Also: How to Get A Short-Term Business Loan

Venture Capitalists

They are basically the innovators of the business world. They’re constantly in search of entrepreneurs with lucrative ideas. If your idea is capable of working at a small level, you can easily convince a VC (Venture Capitalist) to support your business. VCs provide funds in two ways — equity or debt. Venture capitalists can lead your business to succeed at the international level.

Some venture capitalist companies invest in businesses by offering scholarships to entrepreneurs. Techpreneurs can leverage the benefits of these scholarships and become owners of small companies or startups at a young age. What’s more, your company can get money along with qualified business mentors through such venture capitalist companies. Simply put, VCs can assist you to launch your products while guiding your company at the initial level.

The SBA (Small Business Administration) is also a considerable debt option. It has many options but these options need a guarantee of repayment.

Concluding Lines

Many options are available to fund your business at the initial level. If you have a unique idea that you think it is worth investing, you can certainly explore various options and find the ideal one for your startup.

The post Eight Ways Entrepreneurs Can Finance their Business Ideas appeared first on Dumb Little Man.

Watch BTS perform in sweatpants on James Corden, deliver sweet message to fans

Watch BTS perform in sweatpants on James Corden, deliver sweet message to fans

South Korean boy group and unstoppable force BTS joined Papa Mochi James Corden via video on Monday, performing hit song ‘Boy With Luv (feat. Halsey)’ from their shared social distance. The coronavirus pandemic may have suspended studio production, but the Late Late Show must go on.

“I think it’s quite a difficult time for everyone in the world right now,” leader RM told Corden from Big Hit Entertainment in South Korea. All Corden’s guests on HomeFest: A Late Late Show Special appeared via video, while he recorded from his home.

“It may seem like we’re isolated but we’re still connected through our shared experiences, courage, and laughter.” Read more…

More about Music, James Corden, Bts, The Late Late Show With James Corden, and Bangtan Boys

Los Angeles-based challenger bank HMBradley officially opens its virtual doors

The Los Angeles-based digital challenger bank, HMBradley, opened its virtual doors to the public today, allowing the thousands of waitlisted would-be users to set up direct deposits and collect their sign-up bonuses.

The company is offering banking customers an up to 3% return on their savings based on the percentage they save of their quarterly deposits.

HMBradley also set up a new feature which allows users to save towards specific goals.

Backed by PayPal founder Max Levchin’s HVF Labs, along with Walkabout Ventures, Mucker Capital, Index Ventures, and Accomplice, to the tune of $3.5 million, HMBradley was designed to benefit savers, the company said.

Account holders with balances up to $100,000 can receive up to 3% annual percentage yields on their accounts. These account holders qualify by receiving one direct deposit and saving at least 5% of the total amount deposited in an account monthly.

HMBradley accounts are held through Hatch Bank, which is FDIC insured.

To qualify for the 3 percent rate, customers need to save over 20 percent of their income, account holders who save between 15 percent and 20 percent receive 2 percent of their cash per year, and those saving less than 15 percent but more than ten percent receive a 1 percent APY.

“We want to empower and protect every consumer financially to show them that a bank can be on their side, regardless of how much money they make,” said Zach Bruhnke, co-founder and CEO of HMBradley, in a statement.

Account holders have access to 55,000 fee-free ATMs around the country, mobile check deposit and around-the-clock support, the company said.

The company’s MasterCard comes with all of the standard features including zero liability protection and an ability to set up travel, fraud alerts, and cancel cards all through an online portal, the company said.