In order to begin or expand a company, an entrepreneur must have access to business capital. Here are some ideas to come up with it.
When an entrepreneur wants to start up their own company or grow the one that they have, there must be a way for them to obtain business capital. What is business capital? Basically it’s the financial backing necessary to get their start up off the ground or provide fertilizer to one that’s already sprouted. Here are some ideas:
Small Business Administration: The S.B.A. is a government agency which backs the funding of small business loans. There are a variety of loan products available through the S.B.A., including those for woman owned businesses, minority owned businesses and those for expansion of small companies. In order to qualify for these funds, the owner must have established the 3 C’s which are character, capacity and collateral. Character means that the person has a good reputation, pays his or her bills on time and has a clean criminal record. Capacity means that this is a viable business capable of paying back the money. Collateral refers to the assets, such as the owner’s home or land that are being put up as a guarantee for the loan.
Private loans through a bank: This is another way to obtain cash however it is usually at a higher interest rate than those backed by the S.B.A. If an entrepreneur has never owned a business, they may have to take a personal loan until they have a proven track record as an owner.
Credit card advances: This is never a good long term solution but can cover short term financial needs.
Sale of assets: If a new company is a great idea, the owner may want to sell off some of his or her own assets, such as real estate and vehicles in order to come up with the capital.
Savings accounts: Saving money while working at another job is a great way to come up with start up funds. The potential business plan can be polished and refined as the cash accumulates.
Partners or investors: Some entrepreneurs who are short on cash themselves may want to take a partner or seek investors in order to finance their company. There are pros and cons to this option. The pros are that cash comes in from others who want the business to succeed and are willing to put their money where their beliefs are. The cons are that the start up idea person is answerable to others which may cause pressure and sleepless nights.
Business capital is the lubrication needed to keep a company moving smoothly toward opening or expansion. Where there’s a will, there’s always a way.
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