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Going it alone: 4 ways to fund a start-up business

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Going it alone: 4 ways to fund a start-up business

If you are thinking of starting your own business, you will probably need some money behind you to start the ball rolling. You might be wondering how to go about raising funds to make your dream a reality, so we’ve put together a list of 4 ways to fund a start-up business.

Family and friends

Whilst this might not be your preferred choice, borrowing money from family or friends could be the quickest and cheapest option. Not only will you avoid hefty interest rates and charges, but you also won’t need to go through credit checks and lengthy application forms. Be aware, however, that if you don’t pay it back as per the terms that you agreed, it could cause problems. It can also ruin long-standing relationships, so make sure that all parties are aware of what they are getting into. If needs be, formalize it all through a solicitor.

Loan

Many small business owners take out a personal or small business loan to help them get started. Although there will be interest payable on any borrowings, it’s a very convenient way to access the funds you need. You can organize a loan directly with your bank or through a broker. Another option is to use a web-based lending service who will send your details to a variety of lenders on your behalf. Click here for more details. Depending on the amount you want to borrow, you may need to submit a business plan outlining your business idea as well as your projected future revenue and profits.

Remortgage

If you have a substantial level of equity in your home, remortgaging is something to consider. The interest rates on a mortgage are usually substantially lower than that of a bank loan, so it could prove far more cost-effective. Mortgage lenders need to know that you have enough income to make the repayments each month, so this option is only likely to be considered if your partner is working, or if you intend to continue working alongside starting your business. A mortgage valuation would usually be carried out on your property first, and then your mortgage lender would calculate how much you can borrow, and advise you of the monthly payments due.

Angel investors

Angel investors are usually extremely wealthy individuals who provide financial backing to start-up companies that they feel they could make money from in the long term. In exchange for this funding, an agreed percentage of equity in the new business is given to the angel investor. Whilst this is a great way to fund a new business, it is also a decision that needs to be given much consideration. Giving away part of your business before you are even off the ground could be something you regret in the long run, so it’s not something to enter into lightly. That, of course, is not to say that it is always a bad idea. If it’s the only way to get your business up and running and get you one step closer to your dream, it could turn out to be the best decision you’ve ever made.

 

Praneet is the CEO and Editor of the website TeckFly.com. He is a blogger and have varoius blog on various topic and he is from India who loves to read and write about Technology, Gadgets and Gaming. If you share the similar interests then you can follow him on Facebook | Google+ | Twitter

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