Funding New Business/Product Without High Cost Loans

One of the tallest hurdles facing new businesses and entrepreneurs is funding their new venture and the fact remains that securing loans for any new project is next to impossible. Many people are willing to put themselves in debt by maxing out their credit cards, using their savings and borrowing from family and friends to come with enough money to get their project off the ground.

Face it, getting a new product to the market takes time and money and most times the money is going to be hard to come by. It is the experience of many entrepreneurs that it’s nearly impossible to get a loan for a new venture unless you prove to can the bank that you really don’t need the money. However, if you don’t need the cash, many banks will trip over each other to get their cash into your hands.

There is a way to fund your project without borrowing money from banks, friends and family. While venture capitalists sometimes want more than a piece of your business, they will want to see one of their representatives involved in how your business operates before they put money into it. And, many times if things don’t work out the way they think it should, they can pull their money out leaving you broke.

The best way to launch any new product or business, regardless of its scope, is to design a program that is self-funding, bringing in money for product development, packaging, marketing, advertising and sales. You believe in your product so strongly that you are willing to put all of your available financial resources into it, but there’s no reason you should have to. There is a way to find the funding without leaving you and your family without grocery money.

Finding people, friends, relatives and total strangers with money waiting to be invested in a good product or in a valid business is never difficult. However, you will have to show them a good return for their willingness to help you get the business off the ground.

Funding Sources - Options To Raise Capital For Your Business

Access to funding when you need it is essential to both emerging and established businesses. So where can you find it? There are far more sources, which are far more accessible, than you may have imagined. Your capital acquisition strategy may include a combination of funding sources. It's smart to diversify, and a blend of debt, equity, and possibly grants is a great idea. Here are some options:

* If your company needs cash to cover expenses, can't wait for the typical accounts receivable cycle, and has invoices and purchase orders, then consider asset-based lending.

Potential sources include your neighborhood bank or factoring finance companies, which you can locate online by searching for "factoring" and the name of your city.

* If your company needs cash to cover expenses, can't wait for the typical accounts receivable cycle, and has a solid history of credit-card sales, then consider merchant cash advances.

Potential sources include http://Advanceme.com and other such services, which you can locate online by searching for the keywords "merchant cash advances."

* If your company needs seed or expansion capital and is willing to take on debt, then consider business loans, loans from friends and family, and microloans.

Potential sources include your neighborhood bank, the Small Business Administration, http://Prosper.com, http://TheSnapLoan.com, and http://Count-Me-In.org.

* If your company needs seed or expansion capital and has time to apply and wait for processing, then consider government or other types of grants.

Potential sources include http://Grants.gov and online searches for the keywords "small business grants."

* If your company needs seed or expansion capital and is willing to sell equity in the company, then consider angel investors, venture capitalists, and friends and family.

You can locate potential sources using online searches for the keywords "angel investors" or "venture capital" plus the name of your city.

* If your company needs to buy equipment or incur other capital expenses (such as pricey software), then consider an equipment lease line of credit.

One potential source is your neighborhood bank.

Business Startup Funding - Are You Ready?

Business startup funding is always a worry. Do I have enough money to start? Can I quit my job to concentrate full time? Will I be able to cover my monthly expenses?

When the time comes to actually launch your business you must have done your homework regarding your business startup funding needs. You need to be prepared so that if the opportunity to accelerate your launch presents itself, you're ready.

Assess Your Personal Finances

Take out your checkbook and credit card statements and review all of your personal expenses. Find all the frills and eliminate them. It's tough to do, but if you're really committed to getting this business of the ground you need to reduce your personal expenses.

Taking control of your business startup funding doesn't mean you have to quit enjoying life. You just have to prioritize for now. Skip the night show and catch a matinee instead. If you're going out for dinner, clip a 2 for 1 coupon or go to the early bird. Hold off on that tropical vacation for one year.

Evaluate Your Business Expenses

Another element of business startup funding is your minimum business expenses. Luckily, computer consulting is not a capital intense venture. You will have business expenses to cover though, so you must analyze what those are and figure them into your business startup funding needs.

Do the Math

Total up your personal and business monthly expenses. To launch a successful business you need to have at least six months of cash in the bank OR an alternative source of affordable capital. Many people won't have 6 months cash to cover their business startup funding needs. If this is you, you will need to find, or keep, a job.

Limit the job to 15 - 20 hours per week so you leave enough time to concentrate on building your business. Whether it’s teaching some computer courses at the college or working at an electronics store, you have to be bringing is some reliable income. This reliable income will give you the cushion you need to spend time building your client base.

Securing adequate business startup funding is one of the most challenging aspects of launching a small business. You don't want to minimize its importance though. Inadequate business startup funding is at the root of many business failures.

The Bottom Line on Business Startup Funding

Do what you need to do now, in order to do what you want to do in the future. Having enough business startup funding means conserving your cash mercilessly. You have to know where your money is going and have enough to cover 6 months of expenses. If your business startup funding is a little short, a part time job is often the most practical means of securing the funding you need.

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Business Funding Sources

When you decide to open a business on your own, often times the excitement will have you ready to launch your idea right away, however one thing that may be holding you back. You have several options in gaining much needed capital to begin to implement your business ideas. This article will include some ideas you can use to find funding for your business and begin to make the capital you need to grow.

So where can you begin to find funding sources for your business to gain capital? First place you should look is at the support of your friends and family. Occasionally, some people will get lucky and be able to find a lender within their family or friends to begin a business. You will want to be extremely careful however, borrowing from close friends or family can hurt your relationship with them, if extreme care for repayment is not made.

Another excellent avenue is to investigate any type of small business loans your government may offer. Many governments will offer new business owners loans for business start up, or disaster assistance and training. Also with the fast growing internet population there has been websites that have been created that allow lenders and borrowers to come together in efforts of starting up a business.

Another idea is to seek out venture capital firms; these are types of financial businesses that pulls together all partners resources and use these funds in efforts to help a new business entrepreneur being their business. In addition, look into your home equity, these types of loans typically called a second mortgage, allows you to borrow money from an institution by using the equity contained within your home as a form of collateral.


Lastly, credit cards and angel investors are two other types of funding sources you can investigate. Using your personal credit card can be a very tempting funding source; this typically works if you have enough of a credit limit as well as the means to pay it. With credit cards, you will want to be extremely careful in using them for your business venture and make sure that you keep up with the minimal payments at least; otherwise, you could end up hurting your credit and its rating.


Angel investors are typically retired executives or business owners, which are specifically there to help you start your business. These angel investors typically can provide you beginning capital in excess of what any other funding source can. Generally, these loans can start at $20,000 all the way up to around two million.

Business Funding, Where To Go?

The rate of interest on personal loans can be fixed or variable. In case of a fixed rate personal loan, the rate of interest remains the same throughout the loan period and consequently, the amount of monthly payments also remains the same.

Loan market in the UK is swamped with enormous number of loan options. Different loans have been designed keeping in mind the diverse needs and expectations of the UK residents.

The payday loan is credited directly into the bank account of the borrower. They may not have been able to maintain the desired gap between application and approval because of the uncertain nature of the expense for which the loan is needed. In spite of this, the borrower is given an instant loan, while the service charges are upped.

You can use a personal loan for any of your miscellaneous needs. You can even use a personal loan to make daily purchases. However, you must avoid using personal loans to pay for daily expenses.

Business Funding

Every business needs money at one time or another. The process of obtaining financing can be daunting and the chances of success limited if it is approached in a disorganized or haphazard way. Lenders are conservative critters; however it is important to understand that it is their job to lend money, and they are happy to do so if their risk is reasonable. The chances of obtaining a business loan are greatly enhanced if you adhere to the following procedure.

KNOW WHAT YOU NEED

Understand how you intend to use business financing, how much funding you need and how you intend to repay the loan. Be able to communicate this clearly and confidently with prospective lenders.

UNDERSTAND YOUR CURRENT SITUATION

If you are an existing business, are you profitable, and does your balance sheet have positive equity? What does your credit look like? Have a clear understanding of any existing liens and lien priority. Know your credit score and answers to derogatory credit issues (liens, judgments, slow pays, collection actions) before presenting your application. If there have been credit, profitability or equity issues in the past, present a credible argument as to why these issues have been resolved or how this loan will change this situation.

KNOW YOUR OPTIONS

All lending is critiqued from a risk standpoint. Certain levels of risk will qualify for certain types of financing. The level of risk is reflected in the cost of the financing. The more secure a lender's money is, the less it costs you. Get creative. Financing takes many forms, and is available from a wide range of sources.

Standard (conventional) bank financing usually offers the best interest rates, however it is the most difficult to qualify for. These loans appear as a long-term liability on the business balance sheet. Conventional loans are available through banks and other lending institutions and can be guaranteed in whole or part by the SBA.

Revolving Lines of Credit are another form of business financing. This type of loan is secured by accounts receivable or inventory and is available from a bank or an Asset Based Lender. Credit cards are a form of revolving line of credit. An Asset-Based Line of Credit (ABL) is considered alternative financing and is available to borrowers who are too highly leveraged for a bank.

Unsecured loans, on the other hand, require no collateral but almost always have a higher interest rate than secured loans.

Some of these like the credit check are necessary for determining the reliability of the borrower.

Personal loans are loans taken by people for personal reasons. This might sound as a vague definition of personal loans.

Consolidation loans have loan terms ranging from 10 - 30 years. A good consolidation loan would be that which fits beautifully in your financial situation. Consolidation loans are advantageous to almost anyone because of the ease with which you can customize them to your financial stability and your choice.

Secured loan helps borrowers in making the best use of the equity stored in his or her property that helps him in borrowing a larger amount of loan and that too for a longer loan term.

Real Property, Equipment Leases and Notes are another form of business financing. In these contracts the collateral for the loan is the property or equipment itself. When there is no outstanding balance owed on the asset, the property or equipment could be used in a Sale-Leaseback transaction. Here, the asset is sold to the lender for cash, and the borrower leases the property from the lender until the loan is paid.

Landlords can be a source of financing. It is not uncommon for a landlord to contribute dollars or rent concessions to the development of a tenant’s space. For this loan, the landlord may require a Percentage of Gross Sales Clause in the lease as repayment. Extended vendor terms for purchase of product may provide short-term operating capital loans.

In the event that additional credit strength is required, loan guarantors or borrowing someone’s credit may help the borrower qualify for less expensive financing. Be flexible. Your final package may be comprised of several lending solutions

PRESENT A CLEAR AND UNDERSTANDABLE PROPOSAL Lenders need to know who you are personally, professionally and financially. The lender needs to evaluate Income Tax returns (Corporate and Personal), financial statements (income statement and balance sheet) and a cash flow projection. The balance sheet has to look a specific way. The Current Ratio should be at least 1:1, and the Debt to Equity Ratio should be at least 4:1.

Be specific as to how the money is going to be used and how it will be paid back. Lenders want to know what is securing their debt. Lenders evaluate the quality of the collateral, and want to insure that it is adequate to secure the debt in case of default. A secondary source of repayment is required prior to granting standard financing. The personal guarantee of the borrower is often required. In some situations, a lender may seek secondary collateral. Secondary collateral is simply some other asset in which you have equity or ownership, i.e. equipment, property, inventory, notes. Business funding is not difficult if the borrower is creative and realistic. Know how much money you need and how you are going to use it. Be prepared to defend your needs and anticipate the lender’s questions. In the event that a lender cannot grant your request, perhaps it is the way a loan is packaged. Find a lender who is willing to make recommendations that will help you find financing. A good lender will tell you quickly if they can help you or not. If an intelligent and organized package is presented, a timely response is warranted.

The loan can be repaid over any term between 5 and 25 years, depending on your available income and the amount of equity in the property that is to provide the security for the loan.

Debt is a hard thing to live with, reduce debts today! Online processing of loans is of special help in making instant loans possible. Online processing of loans does not simply mean using a computer for sorting and arranging data. Repayments options have to be studied carefully and understood before you apply for secured personal loans. Most people repay their secured personal loans before time and usually early repayments carry repayment penalties. Rate of interest very appropriately depends on the loan amount, repayment term and personal condition.

There are lenders in the UK who can arrange loan for you and that too at a lower rate of interest.

The Federal Direct Unsubsidized Stafford/Ford Loan is a direct loan the government charges you interest while you are in school.