We won’t lie to you, starting a business can be a very overwhelming process. However, if you do it properly, it will be a very rewarding experience. While you may have a detailed and excellent business plan, it will not be possible to implement them without the right funding.
Start-up Financing can be very difficult to secure. The situation can be even more daunting if you have a poor credit history. While there will be no standard credit score, different financing companies will have an ‘acceptable’ rating to be approved for a business loan. Listen to this advice by Richard Bishara, if you are looking for a fund for your small business.
What Are Some of My Options when Looking for Start-Up Financing?
If you are looking for a fund for your small business, but you are not qualified to secure a loan from a traditional bank, you should not be discouraged since you still have lots of options. Here are some of them.
- CDFI (Community Development Finance Institutions)- Thousands of CDFI are actively operating all over the country, providing start-up financing to small and micro-businesses under a reasonable term. CDFI will also consider your credit score but will look at it differently. They will try to understand what happened why you have become fiscally irresponsible and determine the relevance of the situation. For instance, job losses and medical issues can be acceptable reasons.
- Partner Financing- In partner financing, you will have to involve another player to fund your business in exchange for other things such as distribution rights, staff, special access to products, etc. According to Richard Bishara, Partner Financing will be an excellent alternative since the other party who will provide the fund will usually come from a bigger business. They have already built a solid customer base, marketing strategy, and salespeople that you can use to your advantage.
- Crowdfunding- Indiegogo and Kickstarter, are two of the most popular crowdfunding sites today. With this option, you will be able to collect small investments from private individuals. Before choosing the right crowdfunding site to complete your start-up financing, it is extremely important to read the terms and conditions. Some websites will apply fees or require you to complete your goal before you can withdraw your money.
How Do I Make Sure that The Investor will Be Interested in My Prospect?
When securing an investor, you need to be aware of what these people are looking for. For instance, they can be considering the potential of your concept. The idea should be innovative, unique, scalable, and feasible. It should also have a market. Future potential is also important for them.
By preparing a comprehensive draft of your business plan, these investors will be able to gauge the potential of your business and grant you start-up financing. Finally, they will also think about the ROI (Return on Investment). You need to give the investors confidence and convince them that they will be able to gain back their investment.