STARTUP FUNDS are essential in opening and successively running a business. However, it’s not an easy task. Lack of funding, often called ‘startup capital’, is the reason why numerous businesses have failed miserably. Money is very important to starting up a business and keeping it running. If you have any business idea, you should note that the aspect of capital can never be overlooked. In fact it’s the most important asset you need.

There are two main options of raising startup funds, which include equity investment and debt financing. There are numerous ways you can raise capital based on the above two elements. You need to understand them clearly in order to make an informed choice regarding which one fits your situation.

Personal Cash Accumulation

You should have savings and use it, supplemented with money from lending institutions. It can be quite difficult to save startup funds given that most people who have business ideas lack money, but sadly, it’s the only way you can get money from lending institutions. It shows commitment on your part. Banks and other money lending institutions remain skeptic about people who have no investment.

Look for a Business Loan

This is the preferred route for most people who want to start business and lack start-up funds. However, there are several factors which you ought to understand about this money lending route. There is the element of collateral, interest rates and late charges. The community banks are most lenient on the borrowing terms and that’s the best place to get start-up funds.

Form a Business Partnership

This is another way of raising funds to start a business. You will, however, have to approach an individual who has an investment mentality like yours and try to win him/her with a nice proposal. It’s not an easy one, but in the event that you find one, you will be able to combine the financial assets each of you has and come up with a substantial amount for startup capital.

Equity Investment

This is a form of raising capital through selling company shares. You will, however, have to incorporate your business for money saving on taxes, securing personal assets by limited liability alternatives. The most important thing about this startup fundraising method is that you will have to build trust with vendors, employees and customers. When your business is incorporated, you can choose to run your business in the form of C corporation, sole proprietorship, or LLC, and then sell company shares as an alternative of personal assets.

Investment Companies

These normally work in collaboration with the government. They give business owners viable opportunities to raise capital with an agreement that you will allow them to own a certain percentage of your business. This remains another viable opportunity of sourcing startup funds.

There are numerous ways to come up with startups funds out there. What you need to understand are the laws and rules governing any plan you choose to go execute.