Finding Capital Sources for Your New Business

If you are starting a business, you need plenty of capital to sustain your company in its early days, since you probably will not make a profit for at least a few months. As you find ways to pay for your first rent installments, utility bills and supply shipments, consider using one of the following techniques.

Finding Capital Sources for Your New Business

Apply for a Line of Credit

Credit lines, also known as pret argent rapide, provide capital quickly in a process similar to using a credit card. You borrow as much money as you need, although the lender usually sets a limit based on your credit score, and then you pay it back on a schedule determined in your contract. Lines of credit are good for situations when you don’t know how much money you need or when the amount that you need varies from month to month. They are also more flexible than other money-borrowing options, such as traditional loans.

Look for Investors

Investors are people who put their money into your business in return for a share of the profits. Sometimes, investors own large shares of the company, but if you want to own the majority of your business, ask many family members and friends to invest small amounts of money into your business. Investments are not loans, so if your company does not succeed, your credit score will not worsen. However, to avoid disagreements over investors’ profits, create a contract before you accept money from anyone. Carefully explain what percentage of the profits your investors will receive as well as any other privileges. Have a lawyer examine the contract to make sure that it is legally sound.

Apply for a Loan

When you need a large amount of money for a one-time purchase and you don’t have time to earn the capital, the best option is a loan. Most banks offer a variety of loans depending on how you will use the money. If you own a small business, explore the Small Business Administration’s programs to see if one fits your needs. Keep in mind that banks investigate applicants’ credit histories, business plans and tax returns. To avoid delays, prepare all of the necessary paperwork before you begin your application.

All business owners have trouble meeting their financial obligations in their companies’ early months. While you cannot avoid all monetary issues, by finding sources of capital before you open your doors, you will set yourself up for financial success.

Posted in: Business