Sources of Capital for a Startup Reviewed by Momizat on . As an entrepreneur that wishes to start your own business, you may be looking for ideas on where to get capital for your startup. Thankfully, you have several o As an entrepreneur that wishes to start your own business, you may be looking for ideas on where to get capital for your startup. Thankfully, you have several o Rating: 0
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Sources of Capital for a Startup

As an entrepreneur that wishes to start your own business, you may be looking for ideas on where to get capital for your startup. Thankfully, you have several options. We’ll discuss four sources of capital for your startup.

Bank Loans

Banks are an obvious source of capital for your business. You can take out a business loan from your bank and it may be easier to take one out from a bank that you already have a long relationship with. Recent news from Bloomberg shows that U.S. banks are easing their lending policies to businesses due to competition. The Feds’ policy to keep interest rates near zero is also a factor in why banks are easing their business loan policies.

Credit Unions

Credit unions can be another source of capital for your business. You have to be a member of a credit union in order to borrow money from them. The “not-for-profit” status of credit unions helps them focus on serving the needs of their members (i.e. for savings and loans) rather than profits. Credit unions also may prove to be a cheap source of funds after factoring in the interests and fees that you’ll pay for the loan.

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Friends and Family

Friends and family can also be source of capital. Treat them as you would more “formal” sources of capital like banks and credit unions and outline to them how you plan to spend the funds that they will lend to you. You also need to give them specifics on how and when you will pay them back. You need to specify if you will be paying an interest for their help or if they will get an equity on your business. If they will get an equity, you have to specify their role in the day to day management of your business.

Credit Cards

Tapping your credit card is another possible source of capital. Entrepreneurs that will enter the manufacturing sector can purchase equipment with their cards or retailers can use their credit card to purchase inventory. Entrepreneurs that will go the freelance route can also use their credit cards to invest in equipment such as computers and specialized hardware or for other expenses like Internet access. For relatively small expenses, credit cards can prove to be a useful source of capital. For larger capital requirements, banks and credit unions may be cheaper sources of capital since credit cards have charges and fees aside from the interest that drive up the cost to use this as a source of capital. It’s best to use a comparison website to help you find the best credit card for your needs.

Banks, credit unions, friends and family, and credit cards are just some of the options available to an entrepreneur that is looking for a source of capital. Study each of them and pick the one that fits your situation. Remember that a loan has fees and interests associated with them so it’s best to learn about the responsibilities that you take on when you apply for a loan.

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Muhammad Aamir is an avid learner and online marketing consulting. Including guest blogger, blog posts sailing and link building. Social Profiles: Twitter, Facebook, Google Plus Contact: muhammadaamir2013@gmail.com

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