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It is quite challenging to find a source of financing on any economic climate. This is regardless if you are looking for money to sustain through the hard economic times, capital to expand or even start-up funds for your small business finance. But with the current hard economic times, getting a hold of some money is not easy.
Small Business Financing
Here is a five step guide for financial techniques to help you secure some money and what you need to do to achieve small business finance.
1. A Bank Loan
Apply for a bank loan. Although borrowing from the banks have become strict nowadays, there are banks that have reserved friendly loans for small business finance. An example of such banks is the J.P. Morgan Chase and Bank of America.
2. Credit Cards
Using your credit card to fund your small business financing is not a very good idea. If you get late with the payments, you will get a poor credit score. Improper use of the credit might drive you into a bad financial situation that is hard to recover from. However, if you use your credit cards responsibly, it can save you on a rainy day.
3. Make Use of 401(K)
If you are intending to start a business, but you are unemployed, you could be probably thinking about the 401(K) you have saved up for years. The tax code allows you to use that money, only if you follow the right procedure.
The steps are legally technical and you might require the help of someone who is experienced in setting up a corporation. These funds are your retirement plan and in the event, the business does not work out, you will lose both the retirement funds and the small business finance.
4. An Angel Investor
Remember to abide by the rules if you are looking for an angel investor. The rules are: be concise, avoid jargon and have an exit strategy. Due to hard economic times, these rules have become harder. You can get an angel investor, According to Quantum Finance Australia, the tips for getting one are:
- Experience- Having experienced managers or advisors will encourage the investor to invest in your small business finance. With hard economic times, he might shy away thinking you are inexperienced.
- Are You Passionate? – An investor can surely tell a difference between people who are serious to do business and those who want to make quick money. If yours is a get rich quick kind of business, no angel investor will pay attention to you.
- Knowledge of the Market- An angel investor wants to ensure you know what you are doing. If you want to succeed with an angel, you must conduct a market assessment, solid marketing and sales, and competitive analysis. The angel needs to know that you understand the market you intend to enter and you have the discipline to hold on to it.
- Show Your Potential- If your business is young, the angel may not pay much attention to the small business financing. Especially if you have no history as a successful entrepreneur. To overcome this, develop something that will keep you on top of your business such as huge sales.
5. Family and Friends
You can use the help of your family and friends to help you raise up start-up capital. However, remember not to use them as creditors as you might put them in awkward financial situations and create strained relationships with them. Approach them only when you have the small business financing plan already in place and they can actually prove it. They need an assurance that they will recover their money back again.
The options for funding your business are limitless. You just need to find the source of funding that is suitable for everything you need to know for buying and the business. Consider all the options in this article to secure yourself a favorable source of funding for your business.
Read more and, you can adopt one or more methods business and finance for your better ides.