When you start a new business, there are many things you’ll need to consider. First of all, you’ll have to find your niche and think of ways in which you can beat the competition. Then, you’ll have to draw up a business plan that sets out the path you’re going to take. After that, it will be time to start looking at different funding options. With that in mind, we’re going to spend the next few minutes highlighting some of the most popular means of obtaining capital available to you today. Which you choose to select will depend upon the amount of money you need, and how you would like to pay it back. The seven forms of lending listed in this post should point you in the right direction at the very least.
Just remember that you should never rush when agreeing to borrow capital. Even if you need the money very quickly, you still need to read the small print and ensure you understand the ins and outs of the contract you’re about to sign. The last thing you need is to find out further down the line that repayments are too high for you to make. Defaulting on any form of lending is a bad idea, and you should aim to avoid it at all costs.
So, without wasting any more of your time on long introductions, here are some suggestions you might like to consider…
1. Credit cards
If you only need a few thousand pounds to get things up and running, it might be wise to apply for a company credit card. Most will have limits of at least £2000 which can be increased as you use the card and make repayments. Indeed, many providers will put your limit up without even asking whether you want the extra funds. Again, you need to read through all the details of your contract before signing on the dotted line. Cards with interest rates of over 20% are of no use to you. Some providers offer an introductory deal that means you don’t pay any interest for the first twelve months, and they are obviously preferable.
2. Unsecured bank loans
Most banking groups have been very careful about agreeing to unsecured loans since the global financial meltdown. So, it has become incredibly difficult for most people to gain funding via this means. However, if you have a good history of making repayments on time, it’s not impossible. In most instances, you can find out whether or not your bank will offer you a loan by visiting their website and filling in the appropriate forms. If you’re turned down, there’s no harm in dropping in and asking to speak with someone. You never know; there could be an issue with their system.
3. Secured bank loans
Presuming you own property or something of value, your high street banking provider may be willing to release funds secured by those possessions. You must be 100% certain you can pay the money back though as losing your home is certainly not ideal. Just book an appointment to see your bank manager as soon as possible, and ask about any assistance they can provide. In most circumstances, you will be able to obtain a secured loan if your possessions are valuable enough and you have a good credit rating. You can find lots of information online with regards to improving your credit score if that’s required.
4. Payday loans
Those who only need a small amount of cash for a very short period could benefit from the services offered by payday loan companies. We’ve all seen the shocking news reports about how much interest these companies charge, but that’s just scaremongering. So long as you make your repayments on time and stay within the terms of your agreement, they’re pretty reasonable. Most providers offer responsible loans if you act responsibly.
5. Logbook loans
Logbook loans haven’t been around for very long, which is why most people have no idea about what they are. Companies will lend you money based on the value of your car or automobile. This option probably isn’t much use for the average new business owners, but it could be if you own classic cars or expensive models. One of the best things about logbook loans is that you get to keep control of the vehicle while the contract is ongoing. The provider will only take it away if repayment deadlines aren’t met.
6. Private loans
There are lots of private companies around these days that specialise in providing funds to new business owners. While their interest rates might be a little higher than those you might expect to receive from the bank, they’re still low enough to make the deal viable. Some might even be willing to invest in your concept. If you manage to get them on side, you could receive the money you need without ever having to pay it back. All you have to do is sell them a small portion of your business. It’s a bit like Dragon’s Den, but without so many annoying millionaires.
7. Use your profits
If you can’t get hold of funding through any of those means, you’ll have to get a little innovative. Presuming you have enough to start trading, you should keep your expenditure to a minimum and use your profits to fund your progress. At the end of the day, that’s how thousands of business owners had to do it in the past, so it’s more than possible. Try to work from home during the early stages, so you don’t have to pay any extra rent, and avoid employing staff until there’s no other option.
There you have it guys. No matter what situation you find yourself in over the next few months, at least one or two of the suggestions made in this post should be of some use. Whatever happens, don’t let a lack of money get in the way of you achieving your goals. The business world is tough, but we’re certain you can handle it.
See you back here soon!