Nowadays, people seem to wish to have a business, no matter how small it is, and those who already have a business are looking for means to sustain it. Funding seems to be a common obstacle for self-employed people, especially if they don’t have a consistent, stable income.
Self-employed people may need funds to expand their small businesses or start one. While every business has its own unique needs, common funding needs include stocking, utility bills, equipment, renting, and marketing. Whichever reason it may be, funding is critical to the survival of a business. There are several means self-employed people could raise funds for their small business. Here’s a list of some of the best ways.
Low Doc Loans
Low doc loans are a convenient way for self-employed persons and small businesses that don’t have quality income history to get funds. Quality income here means people who don’t have conventional financial statements to prove their income. For more information about low doc loans, you could check this out to find everything there is to know about this loan.
Low doc loans are said to offer a faster funding process with flexible terms. Among the requirements you’d need to qualify for this loan is a statement of income and a business activity statement. It’d be a good starting point for your small business ideas to grow if you have good income records.
You could also raise money for your business through crowdfunding. This is the practice of seeking financial help from a large number of individuals to fund a business. It’s usually done through the internet, which means your fund could be from anywhere and anyone.
The crowd that contributed may ask for your product or service in return, while others may want a share of the business profit. You’d need to provide basic and detailed business information for people to understand why they have to fund your business.
Crowdfunding usually works out well for small businesses that have the potential to grow and reach longevity. The size of the crowd you could pull will likely determine the amount you’d get.
Bank loans are another way for small businesses to access funds. But unlike before, the conditions for applying for bank loans seem to have become stricter now. There are different eligibility criteria a business owner has to fulfill before being granted a loan.
Most likely the bank would scrutinize your business thoroughly and check your income statement and collateral credibility to determine your business’ profitability in the long run. It doesn’t seem like a complicated process once you have all the requirements. Try to do your research on interest rates and the requirements of different banks before applying. Most importantly, don’t forget to read through the terms and conditions attached to the loan before signing any agreement.
Support From Friends And Relatives
It’s common for friends and family to support their loved one’s business, especially if they’re just starting. As such, you might want to organize a launching event for your business to get your friend and family to contribute.
You could also ask them personally for financial help. One advantage of this option is the processing period is usually speedy. Since they’re your friends and family, they may not want to burden you with too many terms and conditions. Besides, the interest rate may also be low, making it easier to keep up with repayment plans.
Moreover, it’s easier to ask people you know for help. However, you may need to consider what happens if you fall out with them. For record purposes, it’s recommended to put in agreement what you borrowed, the interest rate, and when it will be paid.
There are grants set up by the government basically to help small or start-up businesses grow. As a business owner, you may do your research to find the right one for your business.
The application process for government grants is usually time-consuming because of the many people constantly applying for them. Besides, the processing period also takes longer than other loaning options.
Before applying, try to check the type of grant offered. Some grants are made for a specific gender, age, state, products, and services. If you fulfill a grant-specific requirement, you may go ahead and apply for it. Government grants are almost free money, and even if you need to pay back, you’d normally be given plenty of time to do so.
There’s no one-way road for self-employed people to fund their small businesses. Business owners may take the first step by seeking out the available sources of funding through government grants, crowdfunding, bank loans, and even loans from family and friends. Who knows, any of these might just work out.
However, before signing any agreement, try to take time to read and understand the requirements, terms, and conditions associated with the borrowing and returning of the funds. Also, try not to do anything in a rush as this could either make or mar your business.