When starting a business, one of the first concerns that arises is how to locate the proper funding . Sometimes, grants are available, but these are pretty rare.
Sometimes, you may have enough cash to limp along until the company takes off. But, this is often difficult as well. You may also consider investors, but they will have to be offered company equity you may not want to give up.
Other times, receiving a loan helps, but even this can be tricky. What can be done to maximize the chances of receiving a loan?
Steps to Take
In order to solidify the chances of acquiring startup funding, it is necessary to have a thoroughly thought out idea. The more people realize an idea was thoroughly researched, the more likely they are to lend.
Credit is difficult to come by. Because of the recent difficult economic times, banks are especially tight with their lending. Even well thought out business ideas have a hard time receiving funding.
But, in order to maximize the chance your idea is funded, there are some steps to take. First, research the target market thoroughly. Who is interested in buying your product?
Have you tested your product or service on a handful of people to determine its future viability? Have you been working on your company part-time, and have you established there is demand?
Where can your target market be located? How will you help them learn about your product or service? Will you advertise in the mail, online, or on the radio? What type of conversion rate are you experiencing?
If you can answer these questions confidently and with ease, your chances of receiving credit increase dramatically. What professional or previous business experience do you have?
Is it related to the current company you are attempting to start now? Anything you can demonstrate that enhances your chances of success is helpful.
Possible Lending Sources
Even the best plans don't receive funding in this difficult economic climate. Banks are very afraid to take on any risk at all right now. If the bank decides not to extend you credit, you fortunately have other options available. You can ask family or friends to loan you small amounts.
However, lending from family and friends is generally not a good idea. More often than not, this leads to hurt feelings and ruined relationships.
One potential idea could be any of the many peer-to-peer lending sites. You can borrow amounts ranging from $10,000 to $20,000. This can help you get off the ground.
If you don't need a substantial amount of money, $10,000 or less, consider crowdfunding. Hundreds and thousands of people give you small amounts of money.
And, this money comes with no risk. It functions more like a grant and less like a loan. However, it is customary to offer something to the people who funded your idea later on down the line.
Small business loans in Australia are difficult to receive, but they can help a ton when you do get them. As with many other aspects of being an entrepreneur, persistence helps.
About the Author
This Wiki was written by Andy White, CEO of Biz Trader .