Every startup needs to have capital, whether for initial rollout efforts, funding product development, acquiring inventory, or paying the first employees. Most entrepreneurs think that bank loans are the primary source of getting a fund, only to realize that banks are the least contributor for startups.
Getting funded is so hard, that is why many entrepreneurs have unreasonable expectations on how to fund their businesses. Thus, they spend too much time and resources on methods that won’t really lead to the long-awaited success.
Aside from bank loans, here are some inspiring and doable ways for financing a new small business.
1. Loan from family or friends
It might be difficult to find money in starting a business, especially if the entrepreneur only has an idea with no customers, assets, or revenue to back it up. Family and friends can be a vital source of funding since they are the people who trust them the most, even before they can prove that their plan will work.
The commitments should always be placed in writing such as promissory notes, which turn to value at a rate determined by future investors.
2. Loan from angel investors
Angel investors are mostly professional entrepreneurs who are willing to help the future generations of business owners. These investors give money and in exchange, will ask for equity in the company.
Angel investors excel from other types of financing options because they…